Talk to a CPA as there is also the "insolvency test" IRS form 982 that may reduce/eliminate any income taxes due from forgiven debt.Generally 0ver 95% of short sales include a waiver of the balance.Do you have any other major assets...RE with a lot of equity, etc. ...as the bank will look at your over all financial picture.Don't know anything about Massachusetts recourse laws.

He is also likely to have a better maintenance routine that reduces the typical costs because of being a head of the curve or using different materials.

In the past I have analyzed such properties and found that you are in a better position to reduce rent - yes, reduce  and transfer utilities to the tenants (average of a 10-14%) increase in cash on cash ROI. 

Don't forget when you sell something included in the collateral that the bank must approve it or get something for reducing the collateral.

The above article cites "inventory constraints, credit hurdles and reduced affordability".

A higher personal debt-to-income ratio will potentially reduce the amount for future loans/mortgages I may be approved for, despite those debts being under an OLD. 

The house looked fantastic, but to me it raised a red flag.Needless to say the house is still on the market at a much reduced rate.... 

Another view point is if the principal pay down or contribution amount can also be described in the lease agreement or option contract but if its not detailed or explained then fannie reverts to its default rules above market rent.. etcClint and I talked about just reducing the potential sales price at the end by the amount of the "principal reduction/contribution," to avoid potentially red flagging DF rules.

Any gift over some limit ($12,000, I think, but it may be a bit higher now) reduces the amount the giver can pass tax free in their estate.

If you pay more than the formula you most likely will reduce your profit.If you plan on 6 months between your buy and sell and that you are earning 20% during that time you can count the cost of financing and subtract it from your profit.Good Luck.Bill