It sounds from your description that you could also be eligible to use the last principal residence exception to withholding. 

They obviously took a step back with down-cycles, but long term debt and sound investing principals got them through without having to sell anything, which is also my train of thought when investing.  

I advised him that per our agreement on the lease he now owed his security deposit since the initial term was over, and he found a one word loophole in the wording “next lease” and he delivered me a letter that his lawyer coworker friend wrote on legal letterhead, defending why he didn’t have to pay a deposit!

Most buyer/ tenant representation agreements are written in such a way that the tenant would owe the commission and not you.

For example, if your house appraises at 150k and you owe 100k you could have $35k in a HELOC -> (150*.9)-100 = $35k . 

If no historical results, provide a proforma operating statement.List of renovations completed on the properties and the costs associated with the renovationsCurrent personal financial statement – please include all assets/liabilities even if housed in LLC’s or other entities (see attachment if needed) – if you are providing your personal financial statement on a different form, please just sign and date our form.Two years’ federal tax returns with K-1’s for all principals of the BorrowerGlobal real estate cash flow of each principal – see templateResume or bio of work and real estate experience of principalsRather than using the back of a napkin, I'd like to put this information together in a professional looking way but I'm not sure about what best practices here are or what that might even look like. 

It sounds like the living expense reduction and being able to build equity through principal pay down and appreciation will put you in a decent spot.

@Justin KnightenThat sounds correct but you should still have an attorney review it in case there is some quirky state lawFor example if your neighbor built a 12 bed 12 bath home on the property should they only be responsible for 1/3 of the cost - as based on agreement the answer would be that is all they owe.

In both, you should first document the damages and attempt to send the tenant a list of monies owed. 

Sweat equity paid off nicely, currently owe $99K on it and a recent BPO came back at $240K.