@Basit Siddiqi yes I’m a little concerned, so I checked with the CPA and the response is “the loss is non-passive because that is how it is reported in the K-1”.

I am very interested in the responses so far. 

I would rather own fewer solid properties than 50 or 100 cheaper properties.I hear a lot about California being a terrible place to invest with landlord tenant laws.

One day turnovers, volume discount on maintenance, faster maintenance response.  

The responses are appreciated!

I don't know how long you lived there to accumulate the appreciation and equity, but it's probably located in a solid appreciation area. 

We would be responsible for utilities is the only down side.Quote from @Aubrey Maldonado: With the growth that is still expected in the CO Springs area in the coming years, I'd try to hold onto it as much as makes sense. 

Make sure they are not jumping through a loophole.2) What does the lease state regarding notice and responsibility of rent should they terminate early? 

Louis and has a solid property manager, you should connect with him.I think house hacking is an awesome next step! 

Gentlemen, I greatly appreciate your candid and insightful responses to my post.