The only potential for loss is when they bail on you AND trash the place within the first couple years, which is admittedly a lot more likely to happen in low-income neighborhoods.

You would have to go through the numbers, but you have to recognize this as a sale and use the 1099-C as your proceeds and show your gain or loss on your schedule D.If this is a personal residence, then they may not issue one, but if they do, then you simply have the proceeds shown and the purchase price + whatever improvements you made and show a disallowed loss on the return.Joe

Food for thought.

Our Canadian friends know this company, great food but more of a "cooler weather" type of place.

I have one of my business coleagues that has a similar portfolio to me - 20+ new sfr's leveraged to about 90% and he had a large financial loss on a non realestate business deal that used up all of his reserves.

Rent: $700Expenses: $350 (50% of gross rent)NOI: $350Loan Payment: $398Monthly loss: $48Jon

Plus not enough land in usa to produce for all of our needs and has anyone noticed the rise in many food items we buy daily.

Therefore, your NOI in this case would be about $2,050 per month.Therefore, this is how I see this deal.Gross Rents: $4,100Operating Expenses: $2,050NOI: $2,050Mortgage (P & I only, 30 year, 7.5%, $450k): $3,150Monthly Cash Flow: $1,100 LOSS (OUCH!)

They minimize losses through management (self-management or an external management).

"Dirt-rich, cash-poor"This refers to the situation of having more land than cash to cover it and is a common outcome for an investor who accumulates a bunch of properties that have nothing in common but their owner.If you have multiple properties and are using the gains from some to cover losses in others and losing the battle, it's time to get off the treadmill, despite the temptation to hang on.Go through your portfolio in detail.