To give you some hope, in the mean time of your RE losses, many of us are doing very well. 

If you think this distinction is unimportant, consider what happened to investors who placed their IRA funds with American Pension Services,—an administrator whose founder mishandled their money causing a $22 million loss.

Unless you can weather a storm of bad ROI for the next few years I say you cut your losses. 

Here is my Cliff Notes on this elaborate example:If you have unused losses from the past, they might significantly soften the tax blow from a profitable sale.I don't see how this is called "strategic play" or "premium lemonade."

However, you must have reasonable limits and hold to them.I give a great example in my book where a tenant abandoned a 2,000-square-foot home full of nice furniture, expensive jewelry, a brand-new $2,000 rifle still in the box, etc.

It closely aligns with the principles of the BRRRR method.Low Risk of Natural DisastersNatural disasters can wreak havoc on your property and the surrounding community, causing job losses and the closure of businesses, which often forces residents to relocate.

I have REPS by actively and materially participating in my rental property portfolio, and also work as a real estate broker full time (1099 collecting commissions through a single member/purpose LLC) from buildings I sell.My losses from my rental properties (LLC #A) largely offset any federal and state taxes from my brokerage business (LLC #B).

There's no point in having a rule if you don't know how to enforce it.Example:Requirement to Maintain Renters Insurance:The Tenant acknowledges that the Landlord’s insurance does not cover the Tenant’s personal belongings, injuries, or other losses.

Quote from @David Brooks: I've received advise that our friendly STR loophole can not be used to characterize STR income/loss as non-passive on a California tax return. 

We are not large scale but we do own properties in multiple states and are aware of the limitation of a subjective line like "should have rented in a hot market".