And if they're smart they can maybe get a tax break for it, if they can show a loss on paper.

Keep your sites clean, reduce your liability exposure, keep your loss run reports clean and premiums from increasing. 2.

Then I will deep dive the asset.I agree that you lose control also, but new investors doing a flip and trusting a contractor they met on Angie's List is way more a loss of control I think.

I see story after story of people being upside down and having to sell at a loss because they chased the shiny object without enough due diligence. 

Motivation is an emotional response to a circumstance, not the circumstance itself.Someone in foreclosure, job loss, tax liens, are all circumstances.

Note: I personally don't want to pursue pre-foreclosures, it's tricky and too easy to run afoul of Loss Mitigation laws in MD. 

Prior year losses.

My advice would be to take the time to vet the right PM company because that will be the difference between profit or loss. 

First, it could help you qualify as a real estate professional (REP), or at least make it easier to qualify, which would allow you to offset passive losses from your rental properties against your active income.

Sources for insurance and property taxes: Insurance - ValuePenguin, State Property Tax Rates - Rocket Mortgage.Low risk of natural disaster: Natural disasters can devastate your property and the surrounding community, leading to job losses and the closure of shops and businesses.