Safe rents but lower cap rates.Contrast this with the Midwest or the Northeast where you can pickup rentals for well under $100k in bad/recovering/gentrifying/undiscovered neighborhoods that produce amazing cash flow but many more headaches. 

I am sorry to hear of your losses in the crash.  

Don't get involved with a deal large enough that if it goes sour, you can't recover.  

After the rehab, we generally re-apply for a landlord policy and cancel the first one.A big part of this being reality is huge losses to the insurance companies where a so-called "investor" buys a property cheap, insures it, and then a short time later has a catastrophic loss and a large payout from the insurance.  

The personal  property of the tenant must be moved to a place where the tenant can recover it  without unreasonable difficulty. 

So suddenly your 17% "return" turns into a 20% loss.

Between the brawl with publisher Hachette over e-book prices, drones, and the Amazon Fire phone’s flop, losses are heading Amazon’s way."

My question is, do I need to change my tax strategy and not show a loss, or do I need to pay myself a wage? 

If I did what he was doing I would need a 2nd job to pay for the loses in my "investment". 20 years to recover his initial investment and bleeding cash every month during that time?  

Everyone wants to fight for their slice of the loss to get as much as possible before releasing the lien interest.There are called "loan servicing guidelines" that a servicer has to follow.