I live in Venice Beach so I feel your pain.As far as wondering how the current owners are doing it out here, I believe the majority of owners most likely fall into two categories: 1. owners who bought a long time ago or the properties have been in their families for decades (Venice is huge for this, most owners bought in the 70s when the prices were awesome because Venice was scary to live in but now they are sitting on gold mines and not selling them) or 2. owners who are likely losing money on their properties but in their minds appreciation potential and/or the enjoyment factor of owning in LA prevent them from selling.

It'll change his tune if he realizes he could lose money himself.

You are risking here to have great cash flow but no much appreciation.I have heard of investors selling everything because they had too much trouble with trouble tenants eating their cash flow and almost losing money because of lack of appreciation. 

Losing $400-$600 could cause him financial distress of some degree.

If you don't price in your potential upside, you may lose out on lots of deals to others who are taking into account everything..

All of our reserves, everything.We're to the point where we'll lose everything, and she knows it.What the hell do i do?

Regardless, if the second mortgage holder forecloses, this will result in the homeowner losing their home to foreclosure."

Keela C. this is how you lose all credibility as a wholesaler.

30 days on the market in December isn't bad, things will bust lose in March, but being in Cali you market would be different.

There was a recent thread by a member, a bank loan officer (Corey) about the losses by mortgage originators losing money recently due to compliance issues.