However, if you are involved in renting real estate, the activity is not a passive activity if both of the following are true.

Unfortunately you're dealing with someone who is still emotionally attached to the property and can't be objective about its true market value. 

I heard you can get them for around 2,000 to 8,000 is this true ?

This is especially true to us newbies. 

Everything you said is true, it doesn't meet the 2%, 1% or 50% rules which I know and applied to other properties, but I think we were blinded by the fact that the property meets a lot of our other requirements + it has great appreciation potential based on its location (speculation I know).

I was like "If a quarter of what this guy is saying is true, I'm SO doing this!" 

However, the opposite is also true.

If this is true, the next issue is do you need to live in the same city?

What is true market rent for the unit?

Josh, all true and agreed, with one note: rentals outside of L.A. incur 50% gross receipts tax if LLC is located in L.A.