However, some investors see potential in these markets because of low entry costs, steady military demand for housing, and decent cash flow from rentals, especially if the area has stable, government-backed tenants like service members.

Are you thinking government spending is going to actually get cut and inflation was just a flash in the pan? 

Only thing that popped up for me and it might not ever again is that when Trump shut down the government a while ago it included HUD and I was getting nervous that payments would be delayed. 

However, government officials, pandering to populist sentiment, hold landlords to standards and responsibilities far more restrictive than any other business.  

We generally advise our clients to go ahead and pay the recapture rates if death is the alternative.The good news about recapture - the deductions are a deferred tax liability to you, and an interest free loan from the government.

With government backed rentals, we are assured not to have our payments disrupted by shutdowns, offsetting any loses during that time.

Wow, this seems like government over stepping.......good luck Shane!

Her tenant payment comes from a government entity and is $2100 per month. the house was also recently renovated so all the mechanicals are in good shape. 

This aligns with the other responses in the thread, as passive activity losses (PAL) rules govern how these losses are applied across your rental portfolio.

I think you are over worried about the government coming after you.