To answer Brian's question, I believe you just want to cut your losses and recover some of your cash and possibly pay back borrowed money.Assuming my hunch is correct, you just claim your losses, and there is no tax issue.If you do have a taxable gain after selling this property, you will not have adverse tax consequences, either.

I work 65 - 70 hour weeks running a restaurant, so my free time is really limited. 

I'm not sure how this would help you, and I'm not sure what you mean by "get mortgages on the full value of the 2 houses".All mortgages are going to be limited to a certain Loan-to-Value (LTV) limit...Usually around 75% for a residential investment property.

No right of way taken on side street, concerned about city's perspective, loss of  square footage. 

But check out below what he said to me in regards to this: "First, there are depreciation issues among many other possible factors on the tax return which would be calculated into the K-1 numbers, along with the fact that there would be capital gain/loss rather than ordinary income.

It was massive loss that people can't understand today. 

First things first - 50 K is good money to do lot of things , These "things" might not be just exactly buying a house , but you should try to know what is the best use for that 50k which will give you a reasonable return /break even / slight loss - but the most important thing is , After that project you should gain some practical knowledge abt investing in US Another important thing that I learnt - never take anything that anyone say here as an absolute thing. we all have our blind spots and biases .

I would start the eviction process but I suspect they are probably wrapping up school and don't intend to pay.When renting to foreigners, you have little leverage because they can leave at any time and then it's impossible to recover your losses.

My experience is limited, but I hope to contribute as is feasible as I take my licks in this arena.

There are limits to going lower and any of that money that isn't spent on property will be taxed (called the boot).Things get tricky when you do combos as an option, then you run into limits of how much they can be worth etc etc.