Let's hear your wins and losses with them and your plans for the future. 

Their losses appear limited to the moving expenses.

They ended up selling at a loss and learned a valuable lesson the hard way.If you wouldn't feel comfortable living in the area, then why invest there?

I'm furious at this point, not only for the financial loss but also for hours upon hours of wasted time and running in circles.So here is the entire point of my post and ultimately my question; In clear language on our executed contract, I have included "X LLC reserves the right to file an affidavit of memorandum on the property."

The loss reported on your K1 is likely considered a passive loss unless you materially participate in the syndication.

This is in FL and the lease says "We will not be liable for any damages, loss, or injury to persons or property occurring within your dwelling or upon the premises.

If the business is showing a profit or loss, then that income will be adding or subtracted from the entire income. 

I'm self employed, no other "job"I have STR insurance policies that show a line item for Loss of Business Income.

This is very important so see if you can stick with me here.A motivated seller is not someone that want to, needs to, or even has to sell their house (like foreclosure, tax liens, job loss etc. etc.).A motivated seller is anyone willing to sell their house below market value regardless of the reason why.So it is the willingness to sell below market value is what separates a seller from a motivated seller.Take someone in foreclosure.

I saw a prior post where you mentioned having a STR in Texas.you want to have a conversation with your accountant to see if it can be treated as an active property instead of passive.If it can be, then there is a potential opportunity to offset the losses against other forms of income such as wages, interest and dividends.