I would assume their lender would be in first lienholder position.

Well i would like to get into aparment rental and have some positive cashflow.

You're in first position if the tax lien is taken care of or second position behind it if not.That puts a lien on it right now.

In your situation, I would think using $20k down on a rental that will positive cash flow FOR SURE would be a safer bet and accomplish a similar result.

The lenders position can be compromised with loan modifications.

You also have to anticipate that something negative will happen so your partner might change their position.

This has been both a horrible and a remarkable day at the same time.It is never good when something goes wrong, but sometimes these things happen for a positive reason.

We want to get into the rehab/rental business and create some positive cash flow.

I agree with you completely, and that's why I'm doing things the "old fashioned" way - find a good property, get it at a good price, down payment, regular loan, positive cash flow, buy & hold - instead of following all the gurus and "no down payment" schemes.

If you have no license then you breaking the law (lawyers are partially or fully exempt from the RE license regulations in most states).If you are a principal in the deal then being paid to sell your position or your rights in the deal is legal.The HUD-1 document is not required in all transactions.