I kind of stick to the basic principal the institutional money( hedge funds ) purchased in a and b areas.

These units are relatively basic, they have individual room baseboard heat systems and wall mount air conditioners (1 each), so not nearly as expensive to replace as a normal HVAC system.  

I see a lot of people ask really basic questions like "how much cash flow per unit is good" but don't specify the condition of the property, price, or location.

The best quote that I've gotten is 9%.Basically, Dodd/Frank prevented lenders from securitizing and selling those loans, so they must be kept on the books.I'm assuming since you have four families involved that you would need some sort of entity to hold the shares, and that's going to make it difficult to find financing.

A JV is basically a partnership and no securities license is needed if only between 2 parties.

You are attempting to answer basic questions with your research:1.

So basically I just have one question, what is the average cost to build high end homes in MA per square foot? 

I have a refi coming up and I have some money left in the slush fund after a basic rehab.

If you are not planning on holding the departing residence for a minimum of 8-12 years as a rental which still might not be long enough to take a hit to the equity that's there and recover it fully (if it takes such a hit), then sell now and redeploy the equity into your new house (if you are so inclined) or invest it into any number of principle protected low or no load investments that can return at least as much as it will likely earn as equity...with no risk of loss of principal.  

Hopefully you will have paid down their principle and not created a mess for them.Once you have it taken over subject-to you can probably rent it out, or sell it via lease option  or however you deem to deal with it.