This is because they didn’t budget properly and rent wasn’t high enough to cover actual expenses (repairs and maintenance, cap ex, vacancy and loss, tenant damage and turnovers, etc don’t expect to have any money left over after all of these expenses are accounted for if the rent is less than $1,500/month). 

As long as one person is a real estate professional, you can usually use rental losses offset joint income.

Mold requires moisture and food (dust is enough).

While you shouldn’t categorize all tenants and it’s the landlords responsibility to properly screen, the tenants who reside in better situated housing and pay higher rents are more financially responsible meaning lower rate of rent loss and will generally take better care of the property which combined will result in less time allocated towards management functions if self-performed or more favorable management fee structures if 3rd party management companies are utilized (which ties back to #1, as well).

The income/loss flows to your personal tax return. 

@Mary Jay why did you report it if there was no loss coming out of your pocket. 

Loss of income is another coverage that you will probably want to cover any period of time you can’t rent out the apartment due to a covered loss.

Second, the investment may have been made anticipating a chance of failure; for example an investment may correctly analyze that it has a 50% chance of a 25% ROI, a 35% chance of a 50% ROI, and a 15% chance of a 50% loss.  

From utilizing 1031 exchanges to offsetting gains with losses, the right approach can make all the difference in your investment journey.

I can afford the loss.