I would have thought that at a certain point, it would be declared unrecoverable and simply written off.What am I missing?

If I were in your shoes, I'd simply explain to the downstairs tenants that when the noise is going on, they should call the police and not you.

Curtis is completely right!

Simply call and inquire whether the deed has been recorded.

The upside is regarding the construction loan is you can capitalize the interest during construction increasing your basis in the project, The downside is you will need to bring a decent down payment and if you don't own the land or have any construction experience, and you'll need a partner with developer experience especially if this is your first project.I would recommend a JV with a developer, maybe a reduction on the developer fee in exchange for something on the backend of project completion, there are a few good ones out there that do small projects as well.

This would not prevent your debt to income ratio from being too high, because the mortgage would initially be in your name the banks will still view this the same.Lastly, the six figure bracket is not always as easy as it seems in real estate because things will come up that you completely did not expect and take a huge chunk out of what you're expecting.

The vast majority of the properties go under contract before the rehab is done, however, the investor doesn't close until the rehab is done, an inspection completed and a tenant in place.

What if decides to go after it on his own and cut me out completely?  

(We are keeping the 40k in a completely separate bank account) My questions for local NOLA area BP users:What areas would you recommend for a first time flipper?

To avoid this conflict of interest, you must keep your activities as an agent and your activities as a wholesaler completely separate.