With the decreasing population in some of these areas are we likely to see widespread demolition?

Thus, the value of the IRA has decreased, as some of this $$ did not increase the value of the property.any ideas?

Also forgot to mention market value is a function of time and price.In your area for example average selling time might be 4 months at 140k.If you want to sell in 30 days you might have to be at 125,000.What you will want to do will depending by what percentage the market is increasing,decreasing,or staying flat in value.Banks sometimes put property on the market a few months later than expected if they know the market is rising.If the market is falling they want to get out however they can.

For this property, the "taxable income" is very likely to be a negative number.

Solution- lower purchase price enough to make lender comfortable, or hire a qualified site inspector with more cojones.Case #2: Rural property.Solution- Decrease LTV with less attractive terms, meaning worst case scenario you make a lot of money on the debt and if you have to foreclose, you can sell it a price your borrower couldn't.Case #3: Poorly capitalized borrowerSolution- see Case #2What you meant is that the numbers don't make sense.

Taxable value supposedly $190K.

I expect this to continue for the next 4 or so years (at a decreasing rate).

If the property were to be sold though 1/3 of any gain would be taxable to you.Not sure what your situation is exactly, but the property might qualify as a second residence.

If a city though has very high unemployment, has a decreasing population, has been over built, has little in the way of new industries coming in, it is probably not the best place to have investments.

The lenders offering these pay outs may be disclosing something to the sellers to the effect that it might be taxable.