Most multi-family properties do not perform well in CLT due to how hot the market.

Do you have to take a hit and invest even more of your own cash into the policy because it didn't perform like the 10% proforma?

We're in a similar position and we've not found any third hidden options. 

My wife still owns that property btw, and it's performing very well for her.

I guess my real questions are:Can I be penalized for their failure to perform, assuming they don’t send me the renewal prior to that 45 day mark?

This was our third flip with this contractor and unfortunately we caught him in a lie.

Say for example, given the following scenario:1. in 2016, I purchase my first property and live there for 2 years2. in 2018, I purchase the second property and live there for 2 years as well3. in 2020, I purchase the third property and live there 2 years also4. 5 years after I purchase the first property, in 2021, I sell the house and claim the 250/500k exemption5. 2 years after I purchase the third property, in 2022, I sell the house.

If the remaining partners can't/don't want to buy, then the selling partner can sell to another third party (subject to some approval by the remaining partner).  

My initial plan was to perform land development and subdivide into 1/2 acre tracts and owner finance them starting prices at 60k per lot plus a reasonable interest rate depending on how long of a term would best fit the buyers budget.

Owning a poor performing property is not how you want to get started.