The house had the utilities turned off for the 6 years, and was filled with the original 1 owner's furniture, clothes, appliances, car and ecn food in the frig (without elctric on for 6 years). 

@Mohammed Islam, The claim of loss due to the tenant moving out for the sale COULD absolutely apply to the situation.

Hopefully that upfront diligence plus a healthy contingency budget would suffice to keep me out of that scenario, otherwise I would foresee a guaranteed loss, or underperformance at the very least.

I was so sorry to hear about your loss. 

Loss of Use / Loss of Rents: Normally, there is a 20% included limit.

Two main reasons being: (1) debt does not increase your basis in an S Corp, which means your losses get limited.

I would protect myself and cut my losses so I was not looking over my shoulder or getting high blood pressure every time I heard a knock on the door (hoping it is not the FBI showing up to ask you some questions). 

When you pay cash for a $400,000 home and rent it out, your rate of return will likely be less than 6%.You could invest in stocks and earn 7% or better.You could put the money in a high-interest savings account and earn up to 5%.I don't understand why anyone would pay cash for real estate, erasing many benefits that increase the rate of return, while exposing themselves to the risk of loss (turnover costs, bad tenants, capex, etc.). 

You will have to gather more accurate operating costs (vacancy loss, taxes, utilities, insurance, mgmt fees, maintenance, HOA) to best determine potential future performance.

But then again a large swath of syndicators that jumped in when they did have had major struggles to full blown liquidation and 100% capital loss's..