This is not tax advise on your particular return but some things to discuss with your tax professional.When you say underwater are you reducing the shortfall by the monthly Principal Payment that increases your equity in the property on a monthly basis?

I want to stay in the high end market in order to maximize the cash flow per deal and reduce the amount of total property management required. 

When things get easy, it means you are not doing enough/what you need to do.If you are stressed it mean you are doing a little bit too much.. do MORE and learn how to reduce the stress.Listen to Others but never blindly do what they tell you.

, because you it will reduce your repais and capex expenses for the next 30-60 years.The problem with cheap houses is that the only source of income to pay for both capex and repairs is cash flow - after you have already paid for PM, vacancies etc.

LLC taxed as an S-corp to reduce self-employment taxes.

Negotiate a reduced price and move on otherwise you'll be holding up your property.

The last time a troop reduction was even mentioned, lawmakers on both sides of the border put the kibosh on it reeeal quick.Regardless of what the state/national economy does, service members on military bases get paid the 1st and the 15th, guaranteed.The DoD long ago implemented measures to reduce the impact on local economies during troop deployments, meaning gone are the days of a "mass exodus" of soldiers during deployments.

What do I need to do to reduce my liability and cover my interests?

Foreclosure/REO inventory (this is mainly 18301/18360 zips) has reduces from 300 for 2016 to on track to be around 90 in 2017.

Also keep in mind that when you have higher priced rents those could potentially take longer only because the potential tenant base is significantly reduced!