For those pursuing or tracking REP status - what platform's do your spend RE time on?

Question

I’m curious to hear from others who are actively pursuing or already tracking their Real Estate Professional (REP) hours.

Which platforms or tools do you find yourself doing the bulk of your real estate work in (e.g. property management software, spreadsheets, CRMs, deal analysis tools, etc.)?

Josh L. · Answer

@Edgar Estrada good question.

Maybe more than you bargained for but I have included some excerpts from the IRS Audit Technique Guide on Passive Activity (most recent through 2005), regarding material participation, which is required for REPS. The IRS generally views rentals as not time intensive, which creates a hurdle to overcome. Some of the activities you listed appear to be investor type activities, which depending on the specific facts and circumstances would not count toward material participation under the guidance below. See below. The guide is quite helpful (rather thick though).

ATG

If there is a management firm, it would be difficult for taxpayer to meet this standard. See Reg. § 1.469.5T(f)(2)(ii). It is the taxpayer's burden to prove how many hours he worked and how many hours employees worked. If taxpayer is not involved in day-to-day management or operations, certain activities are disregarded when counting hours for material participation.

The following activities would not constitute material participation:

• Studying financial reports
• Preparing analysis for taxpayer's own use
• Monitoring finances or operations in a non-managerial capacity
• Periodic consultation (not sufficient to meet material participation standard)

Investor-type activities do not count unless the taxpayer is directly involved in day-to-day (see above for day -to day emphasis mine) management or operations. Reg. § 1.469-5T(f)(2)(ii)(B) provides that the following types of activities do not count unless the taxpayer is directly involved on a day-to-day basis in management or operations:

• Studying or reviewing financial statements or reports
• Preparing or compiling summaries or analyses for the individual’s own use
• Monitoring finances or operations in a non-managerial capacity

The above list is not all inclusive. Other activities could be investor-type activities such as:

• Organizing records
• Preparing taxes
• Paying bills

Indicators that the taxpayer did not materially participate (first step before obtaining REPS):

• The majority of the hours claimed are for work that does not materially impact operations
• Business operations would continue uninterrupted if the taxpayer did not perform the services claimed

Alex Brown · Answer

I track my REPS hours with REPSLog, it's been the easiest to use tool out of all the other apps I've tried. mobile friendly and fast.

Michael Plaks · Answer

Here is a useful informal test. Assume you hired someone to help you run your business. Would you pay this person for 3 hours of work if they performed this particular task for 3 hours?

Example. Your assistant says they spent 3 hours "communicating with tenants." Are you paying their hourly rate times 3 hours now? If you're asking them to show evidence, then this is the kind of evidence you need to keep for REPS.

Joshua Thompson · Answer

Hi Edgar,

Ahh with the additional information, I would say most REPs accumulate their hours on property and tenant management tasks. There are a LARGE number of platforms out there that you can use to perform many of these task in and stay organized. You can click on "Manage Properties" at the top, then go into "Property Management Tools". Here you will see a list of tools most investors use on the management side of things. Keep in mind, tasks performed outside of these platforms could still qualify towards REPS.

Michael Plaks · Answer

Maybe another clarification of your question is due.

You seem to be asking: what can I be doing in front of my computer that would count as eligible hours for meeting the REPS minimum hours requirement?

If this is indeed your question, then it's not a great question. Hours not directly related to operating your real estate business most likely do not qualify. For example, watching Bigger Pockets podcasts does not qualify. If you're hoping to meet REPS by logging 3 hours of daily "CRM management" - it does not hold water.

But maybe I did not understand your question.

Jason Malabute · Answer

The IRS generally makes it hard to show that rental activity counts as active involvement, since they see most of it as “not intensive.” To qualify, you have to prove actual day-to-day management or operations, not just investor-type oversight.

Things like studying financials, preparing your own reports, monitoring money without being in a decision-making role, or having occasional consultations don’t count. The IRS specifically says investor-type activities don’t qualify unless you’re truly handling day-to-day management.

Examples of things that don’t count include reviewing financial statements, making your own summaries or analyses, monitoring in a passive way, organizing records, preparing taxes, or paying bills.

The IRS also looks for red flags that show someone didn’t materially participate—for example, if most of the hours logged don’t directly impact operations, or if the business could keep running smoothly even if the taxpayer hadn’t done the tasks they claimed.

Josh L. · Answer

Thanks @Edgar Estrada And thanks for the clarification (which I think my initial response is largely in line with). Very nuanced, so it would require a deeper dive into the specific facts and circumstances as always.

Edgar Estrada · Answer

@Josh Lewer really appreciate you taking the time to share such a thorough breakdown and even pulling in excerpts from the IRS Audit Technique Guide — that’s a wealth of information and I’m sure it’s helpful for anyone following along in this thread.

Just to clarify the lens of my original question: I was thinking more from the perspective of an investor who is personally handling the day-to-day operations of their rentals (rather than delegating to a property manager). In that scenario, activities like direct tenant communications, dealing with turnovers, coordinating with attorneys, contractors, and vendors feel like they should fall under the “material participation” bucket, since the investor is actively running the portfolio.

That’s also what I meant when I asked which platforms/tools most RE investors use to spend the bulk of their time managing these day-to-day activities — since those hours are what typically count toward eligible material participation.

Your context on how the IRS distinguishes between investor-type vs. operational activities is super valuable — thanks again for laying it out so clearly.

Edgar Estrada · Answer

@Michael Plaks

That makes sense, thanks for clarifying. My follow-up is whether direct communications with tenants, vendors, or attorneys (via email, phone, or meetings) would be considered eligible hours. Those seem like core activities of operating the properties, not passive “CRM management.”

By extension, I’d assume that if those same activities are done through online tools (e.g., using a property management platform to message tenants, coordinate vendors, or manage maintenance requests), they should also count. Would that not fall under the same category of “material participation” in day-to-day operations?

Edgar Estrada · Answer

Hi @Joshua Thompson,

Thanks for the reply. I may have worded my question poorly. What I’m trying to understand is: which platforms do real-estate professionals typically use to perform REP-eligible activities/work?

In other words, where is the work happening most often (e.g., property-management systems, lead platforms, CRMs)? If possible, could you share the specific platforms your team uses most frequently?

For those pursuing or tracking REP status - what platform's do your spend RE time on?

For those pursuing or tracking REP status - what platform's do your spend RE time on?

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