;-)  You've already lost over $4k in income.  

But you dont want to do what some did with Morris invest and paid in full up front in cash for a new build that never got built and they lost all their money..  5k  thats not much risk at all.. we usually get quite a bit more than that if we are going to modify any thing. and for upgrades they pay for those as they go in .. if they walk they lose it..  

If you even tried to go this route you would likely get sued for damages which would greater than the lost rent or "upside" in not renting to them in the first place. 

The only recession property values did go down was the last one - which actually started out as a housing bubble and sub-prime mortgage crisis, which turned into a recession.Landlords have done well during the housing crash, people always need a place to sleep, especially when they have lost their home to forclosure.I am not doing the same I did the last years, find value add deals on MLS, buy in good school districts, rent best-in-class homes for top dollar.

Lost your job? 

I have been in contact with a few sellers but because of my inexperience, I lost the deal or felt that I could not help the seller like I wanted. 

So I've learned a little bit and lost a ton money and made a little bit too.m

However since starting a family, I feel like the home has lost intrinsic “face value”.”

This will also allow you to take time on the work and learn first hand each step of the reno process-You have to live somewhere, might as well learn REI in the process - no better way to learn it then to submerse yourself in itWhen I calculate the cash flow for my house hacks, I look at where the rents for each unit will be by the time I renovate the units and am ready to move out (I choose a 1 year window) - Don't focus on the lost rental income while you are occupying the property, you need a place to live anyway - I view the negative cash flow as rent. 

Glad you were able to back out of the deal and lesson learned before you lost too much money!