In this case, am I still able to count the inspection fee as a capital loss, even though this expense occurred before I rented out my first property?

If you want 100% of your investments in public equity, that is fine and you will reap those rewards or suffer those losses.  

I believe it tends to give me a slightly lower return, because the sponsor is going to be more careful, and if there is a severe downturn will prevent me from taking catastrophic losses.

Hi Jeff,Sorry for your loss. 

The conversation, as well as this decision, left me wondering how many insureds are denied policy coverage and cannot afford to bring a suit against the insurer and are unable to recover their loss.

It's just a fire hose of information and a menu of unnecessary expenses for a new investor that puts the cart before the horse. 

If you are in this business long enough you will undoubtedly arrive at situations where taking the small loss even if not fair or warranted based on the circumstances is best if it keeps everything moving and avoids more costly delays, liability and inconveniences.In this case, if you withhold the $2K, you still have to find someone to complete the work to your satisfaction.

I wouldn't worry too much about it, if you have a competent CPA or bookkeeper they should be able to review your books and within minutes have a strong grasp on who gets a 1099 (spoiler alert, not every contractor gets one, I'll be annoyed if I get one since I'm structured as an S corporation) and the amounts to report.1099 filings are usually a loss leader for us, so if you're working with a professional make sure you take advantage of them filing everything for you.

I am not sure if it was just my market or more on their end but at the end it was a pretty big loss for us, so we cut it. 

My thought is is use the Rent Ready feature of reporting his payment history to the credit bureau so it can work in his favor as a trade line, but I'm wondering if this is an unnecessary added step since he can already pull transactions on his bank side.