Yes, but keep in mind that if your mortgage acquisition indebtedness exceeds $1 million and/or you have a HELOC is in excess of $100k, you may be limited in the amount you can deduct. 

This sparked a conversation in the office about how owning a rental property is an excessive burden and there is no money to be made in real estate.

Excess contribution about 2-5%.

Yes, if the house sells for more than is owed and costs of f/c sale, the owner would be entitled to the excess, but that is more a theory than something that really ever happens in reality (except in very rare cases).  

Calculate how much extra this tenant's habit is costing you and factor it into the rent or add an extra charge for excess utility use.

My current plan is to connect with a motivated delinquent property owner who will accept a small payment to sign their property over to me and then market the property for a discount below current market value or allow the county to sell the property and collect the excess proceeds.

One of the most common problems in excessive water usage - - flush the toilet and the water never stops running. 

How much should I allow for advertisement, to make sure the property manager doesn't advertise excessively and waste money when it's not necessary?

I would just make sure it has the nice "backing" that should be moisture resistant and provide a slight "cushion" as well.

Regardless, when you add the deductible expenses to my depreciation deductions, I’m ending up with over $10,000 of tax deductions in excess of rental income on this property that I can apply toward other forms of passive income.