Up until that point, then lender simply has a lien on the property - and the borrower may do whatever he deems fit with the property.Once the gavel goes down - assuming 91 days + 6 months in our example, then the Bank gets what is called a Trustee's Deed or Master Commissioner's Deed - which wipes out all debt - 2nds, 3rds, etc.At that point, you are dealing with an REO (Real Estate Owned) or sometimes called OREO (Other Real Estate Owned) - and when you call the bank, you want the Special Assets Dept. - not Loss Mitigation.

Assuming the buyer qualifies, the lender will only lend based the contract amount.

I assume if the borrower throws the property into the bankruptcy that it would go to the note holder but what if the judge grants the borrower to keep the property.

Do not assume they will.

I am using a SDIRA and all the legal advice I got sounds like you are on safe standing, assuming the 401K falls under the same rules.

I assume you're talking about 15 "units" when you say properties.

Assuming that before leverage, you get 50% of rent as cashflow ($500), you're only getting 3.3% return on pre-leveraged investment.  

By indirect, I assume you mean those of a sub.

(I assume a 2nd, separate apartment is what your are suggesting when you use the term MIL suite)Can you provide a more detailed breakdown of the monthly expenses you are using to calculate for your $635?

I am curious, as I don't know much about townhome communities, and I assumed they pretty much all had HOAs.How many townhomes in your community?