A major inconvenience for me, a total loss for them. 

@Enyi AjokuNot sure what your lease states 1. but In Colorado I have a no smoking addendum which states “no smoking in or around premises including but not limited to cigarettes, hookah, incense, marijuana, etc. any evidence of such are grounds for immediate eviction, loss of held funds and liability for damages.2.

Our attorney has said since we moved out before finding the leak we cannot claim loss of use compensation.

Your landlord insurance will pay for loss of rent for the property being unrentable due to a disaster of some kind. 

If you put the property under a S Corp, the gain/loss would still flow over to your personal schedule E.  

When you sell, you just sold for a "loss" so there's no depreciation recapture.

My take has always been, just to make sure you are able to pay it back in case of job loss.

In the 80's I saw people lose properties and homes with very little debt so debt isn't the issue, it is loss of income and cash reserves. 

Typically they operate at a continual loss ( as per the operating company, i.e. the company operating the crowdfunding site).

We cash flow about $150/mo on average, so any cashflow we have is completely wiped out by our depreciation so we're running it at a loss from a tax perspective.