The are losses that need to be passed through to my personal income.

Re: Also, when we did the rebuild on my home, we used a local general contractor who used a manager, and she was worth her weight in gold.  

We normally showed a loss of a few thousand dollars a year, sometimes when we sold a property we would have a profit. 

Typically, if you only own one or two properties, all your other expenses (maintenance, mortgage interest, property taxes, DEPRECIATION), tend to outweigh your gross income so that your actual net that flows down to your personal tax return is a loss and not a gain.In that case, you get to deduct up to 25k a year in losses (or all of it if you're a real estate professional).Now if your houses are still cash flowing after all those expenses and your LLC really does have a net gain for the year, then that net gain is going to be treated as income to be taxes by the IRS at the end of the year.

Have you developed your investment mode, where your model calculates the Inputs of the investment (cash and time), the Actions (buy outright, down payment for a mortgage, income versus expenses) and the Outputs (profit or loss). 

The lender filed a claim with FHA to be reimbursed the loss of $50,000.

Most likely the buy and build out process works fine but if something goes wrong in the middle of it. your quite vulnerable to loss in this scenario. 5. they are marketing over seas  and those investors are not as intuned as most US investors about what a good deal is what a good neighborhood is etc etc.

We couldn't refi for holds and retail buyers for our properties were starting to have trouble getting loans meaning that our properties that were finished and ready to go sat as dead weight while we were trying to liquidate.Our $100-200/month cash flow on our stable properties couldn't support the debt service on the vacant/unfinished properties for very long and we ate through our reserves pretty quickly while fire-saling everything to make our private money whole.The 20/20 hindsight is that we sold our best properties early because we thought we could weather it out with enough cash and prices weren't really dropping.  

This is much easier than attempting to compute the weighted average of an underlying mortgage and the amount of equity financed. 

Being that you don't know him that well - the potential of $3k in profit does not out weight the risk of injecting $10k into this deal.