Got to the inspection on the one that wasn't rented and over the weekend someone had thrown a rock through a window and stole about 16 inches of copper. 

You rock! 

However, I think they JUST hit rock bottom and didn't start recovering fast enough yet as many are saying.

The split is structured where he gets 8% PIK + 50/50 split of the upside.Thanks,Jim

@Arlan Potter,You are right about one thing the mortgage must be paid in full and the trick to get the judge to sign the order and if the judge did sign the order, you can bet the judge will have someone to auction the home off and split everything's 50/50.Joe Gore

Assuming everything else is rock solid and you made the transfer to the LLC prior to any issues, I'd say you're okay even if you have the conventional financing still in place. 

I've got a partner that I split 50-50 with but he has the general contractor (GC) experience & I have the Finance experience (and my wife has the vision that neither of us have :-) ).

Your investment documents will spell out how the returns are split.

In case you care to know, he said that it is customary for the seller to cover transfer taxes but it can also be negotiated to split the cost. 

Should I A) Continue to look for a lender, B) Look to partner with another investor that can help fund and can split the profits with, or C) Look to wholesale the property since I can't fund it?