I don't see any reply in this thread as to whether Kenny actually has made money and recovered his initial investment. 

The W-2 income does not limit your deductions.You are entitled to write-off as much as you want.The next question is, is the overall loss considered passive?

(A substantial drop in national savings rates from 4.4% to 0.9% raises alarms about future consumer spending capacity, especially as recession looms and job losses become prevalent.)

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.

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

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

You'll most likely never recover your cost (cash).The cost of a 4plex should be less than 4 SF's, but that also means your total property value will be far less for the amount of cash (cost) you put into it. 

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. 

You can recover damages from a security deposit, but you cannot recover normal wear and tear.