And I can understand that with 5 kids some of that first WC payment did need to go to food. 

I think you may have missed the fact that my current primary would rent for 3800 and the mortgage is currently 6125$ this means I if I turned it into a rental I’d be operating at a loss for a lot of years because that’s a huge gap so you can automatically say that I wouldn’t get any cash flow for probably the first 10 years minimum.

I just acquired it and would like to report this property on Schedule C to deduct the loss of first year operations and expenses against my other Sch C business(es) and my husband's W2.

The Error by the Tax Appraiser may have caused you and economic loss. 

Which is a fancy way to say a landlord can eat a minor net loss for a few years if there is many many more years or following profitability.     

. - then they lose thousands:(Here's some useful food for thought (copy & paste):.Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

If managed by the owner currently and you plan to hire people add in a 30% loss of revenue.  

Not only are these extreme events leading to tragic loss, it's also causing sky-high insurance rates and even large insurers to pull out of some states (like in CA for fire insurance etc.).

If you have a BAD tenant experience on this property as a rental and lose several months of rent and incur substantial tenant damage that is all coming out of pocket whereas if you had even a handful of rentals the performing rentals and the monies budgeted for capex/maintenance/vacancy will carry that sort of loss.

Not sure what steps I can take to mitigate my losses.