The rehab was completed in Mar 1984, and after several failed attempts to sell, including a sale to a buyer in July 1984, and then the buyer got a mortgage approved, then loss his job, then the mortgage company rescinded the mortgage approval.

Your community owner/operator, however, can recover the cost of providing utilities to you indirectly through your rent, as long as such costs are distributed equally among all households. 940 C.M.R. 10.05(4)(c).

The effect of the 1041 rule is to defer a taxable event, recognizing a gain or loss, until the recipient, in this case your wife, disposes of the property.

So if the current tenant assigns the lease to the new franchisee, my view was that the new franchisee wouldn't be able to form a new entity and stick my friends restaurant in there (perhaps with other stores operating at a loss) rather than the new franchisee's larger entity/portfolio.

I had an unpredictable bad medical issue make me find bigger pockets about 20 months ago when I was medical recovering and spending a lot of time at home.  

Im guessing here the best course of action is to limit your losses as best you can and concentrate on managing past this thing. 

Avoiding bubbles is better than recovering from them.  8-)

I know some other LendingClub. investors who are experiencing losses (I didn’t, because I invested in only the most conservative notes) .  

So if he gets hard money lenders at 12%, which I think is high, how does he manage to make his payment to investors, would he not be short on a monthly basis, thus the whole project will be a loss?

@Chris PurcellMake it cash flow all night as well in order to compensate for the real loss in property value as explained by  @Russell Brazil  , should you have a zero appreciation property.