If you do a loan modification, you would be doing it based on the 80k not the 40k. if you go to foreclosure, you would be getting the 80k (amount owing to you) + fees, etc...If you do a deed in lieu, you would get the title and decide to rent it, sell it as is, fix and flip it, etc...if you authorize a short sale for 81k, then you would be getting the 80k and borrower will get 1k (Assuming total payoff is 80k). 

If your plan is to go section 8 it might not be a bad idea to go to your local housing authority in the community where the building is located just to introduce yourself.

That said, I have been aware of jurisdictions in the past which have permitted (or simply ignored) non-egress windows in basement units provided egress was in close proximity of the sleeping area  - I do not know if any authority would do so today.

The mere management of the LLC affairs such as having the authority to hire and fire the property manager and occasionally interacts with the property manager to discuss management of the real property would be considered as doing business in California.  

Also, on the joint accounts, I typically have to provide an LOE signed by my wife stating I have full authority and access to use the funds as I see fit.

In all the big cities, investors (and normal homeowners) are competing with foreign flight capital whose objective is not to make money, but to avoid 100% expropriation by local authorities.  

The listing agent will never get it taken care of and turn on the utilities as the do not have the authority to do soIf you really want the property, I would put on my happy face and try to negotiate it down and be prepared to pay for it after closing. 

A call to your attorney or fair housing authority (Art is very helpful) would be a good way to get better information.

For those of you who have not read any of his work, Robert Kiyosaki is an established Hawaiian entrepreneur and author of financial planning.

Luckily, the author’s knew this and produced a free PDF guide called Discover Your ONE Thing Now; Three Simple Steps to Uncover your Purpose and Realize Your Goals.