USA Real estate professional with rental in own name

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I have clients who are owners in several real estate LLCs (some with rental activity (they own property and have a management company provide services), and some where they act as brokers/relators and take commissions on sales.) Last year, as individuals, they bought a home they intended to move into but instead ended up renting it (no management company), resulting in a net loss for the year. This is the only real estate activity they have that is not conducted through an LLC.

In preparing their return, my initial inclination was to use Schedule E (rather than Schedule C); is that correct? I wasn't sure Schedule C was more appropriate. When running the figures through my software using Schedule E, despite noting they are real estate professionals, my tax software does not include the net loss in their self employment calculation, and I believe it should be included, correct?
 
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