This is something I haven't encountered before - many states don't require a filing when rentals generate a loss by default but it looks like Oregon still does.  

Seemed like a scam so I never went any further, they still email me almost daily though.

@Adam Horvath I didn't really think that far into it since I haven't actually encountered it happening yet. 

I felt uncomfortable making first contact as I was unsure whether they would believe me and think I was trying to scam them or what. 

It seems the cost is always greater as you encounter undiscovered problems, which will happen.What I would recommend doing is figuring out what the after renovation value will be and create your own realistic budget for rehab costs. 

I've seen a couple deals like this with passive investors, and your formula is in line with what I've encountered.

What are some of the headaches/pitfalls/roadblocks you have encountered along the way? 

Update: https://www.biggerpockets.com/forums/311/topics/656274-growth-equity-group-how-170-investors-were-scammed

The current PM is a scam.

Hi all,We’re trying to install an HVAC system in our multi family property but have encountered two problems: HAVC companies won’t follow up after coming to do the initial assessment or prices are outrageous.