It seems this turn key provider is quite the peddler with an excuse for every concern you raise which would give me additional pause.

Most people get a yearly raise.

B. tested the unit to see if it's actually defective.

Start-up costs are also deductible but are amortized over 15 years with a limit of 5k.Start-up costs have strict rules and your case might not be the same as this one.Case Summary:Timeline line of eventsStarted investigating property: FebPut first contract (canceled): MayBought first property: December 30thWhether a taxpayer is engaged in a trade or business is determined using a facts and circumstances test under which courts have focused on the following three factors that indicate the existence of a trade or business:Whether the taxpayer undertook the activity intending to earn a profit;Whether the taxpayer is regularly and actively involved in the activity; andWhether the taxpayer's activity has actually commenced.On the basis investor testimony, we may assume that he undertook this activity to make a profit and that he regularly and actively engaged in it.

First is from roof along 3rd floor ceiling and I could not isolate source on leak test.

Here's a quick test... call the company yourself, see how long they take to answer the phone and how they answer the phone.

The current owner’s strategy has been longevity with good tenants vs. raising the rent to keep pace with market pricing. 

I believe my wife and I pass all the test under REPS and material participation.

I’m sure some of you have faced similar challenges.Aside from raising rent (which can be tricky depending on the market), what other strategies have you implemented to get back to positive cash flow?

Contact the local Assessor's Office to find out how much.You state this is a "college town property", but the rents don't reflect that.The low rents typically are reflective of long-term tenants that the current owner hasn't raised rents in awhile.