Would have bought one higher quality asset (Class A or B) in Indianapolis metro area and not two Class C homes "cash flow on paper" which in reality I'm negative most months (sold one home to cut my losses) - constant repairs called in by tenant.

If it qualifies as a short-term rental, you might also avoid passive loss limits, making the strategy even stronger.If you’re considering a cost segregation study, DM me and I can point you to some solid firms in SoCal!

Any tax knowledge of if people doing this strategy are able to take the losses from the cost seg study (on the ADU) to offset their W2 income?

It helps cover things like property damage, liability, and loss of rental income.Here are a few insurance providers in Omaha that might be able to help:🔹 Ally Insurance Brokers of Omaha – ALLY-INSURANCE.NET🔹 Jaffery Insurance & Financial Services – JAFFERYINSURANCE.COM🔹 Linda Miller - State Farm Agent – LINDAMILLER.BIZ🔹 Insurance Solutions of Omaha – INSURANCESOLUTIONSOMAHA.COM🔹 Ed Thompson Insurance Agency – EDTHOMPSONINSURANCE.COM🔹 Tanya Patzner - State Farm Agent – INSUREWITHTANYA.COM🔹 Montclair Insurance Group – MONTCLAIRINSURANCEGROUP.COM🔹 AA Brokers Insurance Agency Inc – [No website listed, but worth a Google search]Let me know if you end up connecting with any of them or find another solid option!

In the US, LLCs are often treated as pass-through entities for tax purposes, allowing profits and losses to flow directly to the owners and avoiding corporate-level taxation.

Our private money investor had a total loss on a house fire a couple of years prior.

Are you certain you would have to sell at a loss?

The longer you wait, the more losses you incur.I encourage you to stay firm yet professional—this is your business, and it deserves to be treated as such.

Unless you can weather a storm of bad ROI for the next few years I say you cut your losses. 

Quote from @David Brooks: I've received advise that our friendly STR loophole can not be used to characterize STR income/loss as non-passive on a California tax return.