for example:Property Value: $100kSeller Mortgage: $100Kyou obtain the property on a subject2, you then turn around and sell with a wrap with the following:Sale Price: $110K (premium due to owner financing)Down Payment: $20KYou then carry a note for $90K that the buyer must pay offYou then apply $10k of the down payment to the wrapped lender, bringing the wrapped mortgage balance down to $90K, the same amount as the note you are carrying.In addtion to all that, the terms on the new note are created to give you a spread between the wrapped PITI & the buyers PITI (assuming that taxes & insurance are escrowed in).So, after the closing you have created (and extracted) $10K (minus any closing costs) in equity from the deal, and you also are now receiving monthly cash flow via your note and you have no property upkeep.DISCLAIMER: I have never done one of these, this is all academic.

The return ratio we use is an IRR (internal rate of return) calculation, which assumes a leveraged purchase with a 20% down payment.

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.