Home prices have decreased over the last 18 months so there is lack of good options and values still above normal. 

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

I would keep track of of all the losses, and work with a CPA.

@Devakumar Sai Chinthala There are income limitations for passive losses, you should check with your tax professional.What will the property taxes increase to after you buy the property?

This route also provides access to capital to fund some larger purchases in the next 5 years (roof, HVAC, siding, windows on rental property and last projects on primary residence) in the form of a HELOC if we were to go the route of a first lien HELOC/All In One mortgage.

@Clark Harbaugh, Given the favorable tax rulings over the last few years (in particular revolving around trusts and their equaling a beneficial interest in the underlining propery) the IRS has actually been much more lenient (or at least silent) on these issues. 

Set aside a big pile of cash or rely on a line of credit you won't be using.The oversimplified insurance concept is to pay a small premium to cover a large loss.

You can end up with net income or, as is very common for rental properties, with net loss.

This is advertised as a “protected” note as Aloha is supposedly fronting the first $100k in the line of loss.

But for the last 3-4 years local residents have decided it was cheaper to just take the groceries.