Perhaps that is incorrect?

Zillow might give you some info. many are incorrect.

Did they invest incorrectly?

I guess my first incorrect assumption was that this llc would be treated as a disregarded entity just as a single member llc was. 

If anyone has additional info or guidance or sees something in this post that is incorrect please share!

IF YOU are accustomed to quickbooks general ledger work always make sure to check and see if there is a Buildium way to accomplish your goal because you can end up with correct accounts and incorrect Buildium reports.The biggest complaint I have is the kludgy way you have to deal with credit cards where you carry a balance.

If a lender pops on here and anything I said is incorrect please feel free to point it out.

This is incorrect tax advice from your friend. 

Were the hosts incorrect or is their another strategy for qualifying to take depreciation as a tax deduction on investment properties for part-timers that I am missing?

There are going be times you get smoked and you want to just cry but it just taught you a lesson of what not to do next time.....As @Bob Floss II and @Jeff Burdick mentioned I'll look to sell the property ASAP.Dont listen to these other people such wholesalers(who normally give incorrect ARVs) and have a really experienced realtor provide for you solid tight sold comps.