Property management is generally a loss leader in the real estate industry.

Makes me sick to see it because it can take someone a very long time if ever to recover from something like that.

They just weren’t bought at the right time, and the market hasn’t recovered enough to bring those values back up.It really has nothing to do with operations of the asset.

But you also have to track your material participation time in your property(s) if you're trying to qualify to use your real estate tax loss to offset your other income. 

I use the loss on this property against cash flow on other properties.  

They all appreciate but peninsula is more stable in downturns and recovers the fastest, I witnessed this myself in 2012 further in east bay was still about 40% down and peninsula and "tech" cities already recovered fully.I am not sure you need a loan or not, recently I asked my mortgage broker he told me for a second home it would need to be at least 50 miles away and also in a city known for vacation activity .   

By default, the tax loss from the rental can't offset your W-2 income because passive losses can't usually offset non-passive income. 

I now see competitor listings at 60+ DOM, so their extra month vacancy already exceeds losses from lower rent…. and they’ll likely settle with a worse tenant.

Breakeven or even a small loss in the first year is not so bad if you need to offset income...and the investor upside is always in the "hold". 

., stocks or mutual funds) that are operating at a loss, if you liquidate those investments to take a loss, you can use those losses to offset your capital gains.