I could save roughly $2500-$3k per month right now, or more if i tightened up the belt. 

They let a lot of stuff in the house go, I'm assuming due to financial strain, hence the short sale.  

If less than 1% of S corp (which I am) gets audited each year, this basically means the other 99+% of people are inconvenienced so the screws on the <1% can be tightened some more.

If we would have had a budget in place, we could have planned accordingly, and tightened up expenses when needed.

The market it tightening up not only for investment opportunities but for retail buyers as well.

@Ben Visser Yes, agencies are tightening the screws.

However, these days you will be hard pressed finding conventional lenders who will go beyond 30yr amortization and many have tightened-up to a 25yr max on residential property regardless of whether it is owner occupied or a rental.

I also warn against going into business with family and friends as the work will definitely put a strain on the relationship.

Given that we are entering into a period of global macro economic uncertainty and tightening monetary policy here in the states, its no surprise stocks are declining. 

Or, you need to tighten up your criteria.