However, even in the best of circumstances things like death, divorce, and disability can quickly change that. 

It all depends on the circumstances as to how much.2) Even then, tenants in Los Angeles have free legal services.

Save for Your First InvestmentCommon Pitfalls to Avoid:Don't rush into deals without proper due diligence.Avoid over-leveraging or taking on too much debt.Be cautious of "get rich quick" schemes; successful real estate investing takes time.Don't neglect legal and regulatory considerations.Remember, everyone's journey is unique, and there's no one-size-fits-all approach.

Dave may have become a victim of circumstance, but it was a circumstance he put himself into.

In a competitive situation, this isn't always possible or the best recommendation, but in most circumstances you should try and plan for it.First step in due diligence - > PROBING QUESTIONS! 

@Jonathan Reitnauer There is a certain amount of randomness that comes from the circumstances - there are only a handful of buyers physically present and the sale happens without onsite due diligence.  

A market open for ignorant $, will abuse and neglect the vast majority of it.

I did tell the lawyer my lawyer like frivolous suits from lawyers as judges on generous with legal fees in such circumstances.  

You can use up to $25k a year of those passive activity losses if you are actively participating in your real estate ventures ("small landlord" exception) and income stays under $100k a year.So yes it can be useful if someone happens to fall under these circumstances, but for anyone who is going to have over $100k a year of retirement / other sourced income, they may be out of luck.It's all timing - you are just using up those PAL earlier than if you waited for the rentals to start producing taxable income (they normally do if it is a good investment), or a property is sold and PAL are released to offset that income. 

Whether or not it would qualify would depend on her facts and circumstances.