You'll want to do research on how much of the interest, if any, is deductible, because taxes also matter to me.  

To answer some of your questionsGross monthly cash flow is $3200 rent - $2550 expenses = $650 Yearly cash flow= $7800Vacancy 8-10% is close to 1 month's rent so = $3200 yearlyRepairs: 5x rule = $576 yearly CapEx: 1% of property value yearly= $4,000 (includes Special Assessments)Once I deduct vacancy, yearly repair budget and capex estimate I'm breaking even, but is that real?

Your tax deduction equals the interest that you actually paid each year.

However, generating large amounts of deductions/losses won't help you if your passive income is too low.

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.

For the purpose of deducting operating expenses and depreciation - yes, after it was rehabbed and listed.

So regarding the distance rule, I found early that it was 50 miles from your primary if you are going to be depreciating the property and claiming deductions if renting it.

Can I qualify as a Real Estate Professional and deduct all losses from my W-2 income?

Taxes are typically classified as expenses and deducted as current operating expenses.   

I am wondering what a fair deduction would be from rent due to there being basically no kitchen in a 1br attached mil set up.