. -- so I can't rely only on the PM's monthly statements and 1099 to track my overall income/loss from the RE. 

Those are generally limited to things such as violations of habitability, military duty, landlord harassment.Under CA laws, landlords are required to minimize losses if a tenant prematurely vacates a rental.

As a wise industrious business owner you must find ways to mitigate loss and often that involves intensive screening .

Are we supposed to eat the $9.95 loss each time?

I’d Atleast make them knit sweaters or bake cookies to sell on the open market to off set the rent loss !

I'm being serious after construction costs etc you could have a massive loss on your hands .. research hard before making your decision.

REP status does not guarantee treatment of rental income/loss as non-passive, to get that you need to document 500 hours of property management.

When the property is sold they will actually have a loss to report because they take the value of the property on the date of the owner's death and can subtract commission, closing costs, etc. 

Due to being transparent the seller called me 4 months after our initial conversation and stated although they will be taking a huge loss they just need to sell it and move on.

Often the lender takes a financial loss too.