Reuben Royal, your rent needs to be considerably higher than just the mortgage payment in order to be profitable.

I will surely do that from next job. learn hard from previous two contractors. it just hard for me to believe that the contractor can just ignore what's in the contract and ask for considerable large sum of money. even he used all the money I gave him for the material as he claimed, he should still follow the contract, right?

The return w/o any other considerations is 2.5%.

Your analysis doen't take into consideration the cash on cash return, which is the most pertinent.

I'd say leave it alone, vacant land carries very little risk, unless there are unique issues about the property or location.

Then you can modify your note later under different terms for the consideration of releasing the additional collateral, like getting a short balloon payment.

I've learned that with asset lending I give almost no consideration to the quality of my borrower's credit.

Do you take into consideration vacancy rates when searching for a new market?

Another consideration is differential.

But I think it's somewhat a unique circumstance since he has already "moved out" his stuff.