2) If secondary, do you have a contingency plan to fund this asset's negative carry?

Debt. org estimates that the average household with a credit card carries $8,396 in debt.

The offer was for a modest amount down, with the seller carrying back a note.

Thirdly, if the losses can only get carried forward to selling time when I realize capital gains, then isn't there the rule (i forget the name) which allows you to sell, and buy another house within few months, and hence you don't have to pay any capital gains on the first house?

No W-2, but you're right that carrying a W-2 makes this more difficult, for sure. 

I do not want to go into another vacation market but rather a metro area with a more diversified economy again just to get into a different type of asset.That being said I do want to continue to short term rent the next few properties we get at least in the first few years of ownership in order to increase cash flow to combat these higher prices and carrying costs before potentially converting to more passive long terms down the line.Therefore I am looking for markets that 1) have a decent draw of visitors year round 2) have regulations that allow strs in some parts of the city 3) Are in growing cities in the west or south.Below is a list of markets I have identified as potential places to look and I was hoping to get some insight from either other investors doing the same thing or agents/investors in any of these markets on whether this is potentially a good market to explore or not.1) Salt Lake City (this is right at the top of my list due to its proximity to ski resorts, expanding of the airport and long term strategic business planning of the area but I have very little knowledge of this market)2) Denver 3) Phoenix (used to live in AZ and like the fact that the state of AZ seems to look favorable on strs)4) Tucson (see above but lower home prices/potentially less appreciation)5) San Diego/LA (these are attractive because of their proximity to my home in Irvine)6) San Antonio (love that it is very close to the booming Austin and feel that this is a market that could see some real growth in the future)7) Tampa/St Pete (I have always been very interested in this market for both short term and long term rentals)8) Raleigh (have invested in Charlotte and love NC but again very little knowledge on this area)Any insights or advice on any of this would be greatly appreciated.

I'll bet she's lying to you so far......and you'll need to carry a pistol when you go meet with the water thieves, people don't like having their water shut off.

Would the seller be interested in carrying a 6 or 12 month note for you for the remaining downpayment amount to buy some time to liquidate the condo?

They carry a giant debt load and debt service, there income is HIGH RISK for compression and decline, so no, they scare me. 

We were informed by our tax guy this year that since personal business income exceeds $150k, our investment real estate losses cannot be written off against our non-real-estate income but rather carried forward indefinitely until sale.