That typically means: • 500+ hours in that activity, or • You do all the work substantially, or • You’re the only significant participantMiss that second step, and your losses stay passive even if you qualify for REPS.This is where cost segregation strategies often get misunderstood.

While they are friendly, I just learned they have let a rood leak languish since December on one property, and on a second one they have now for three years 'forgotten' it is under warranty for the SECOND time.  

But I’m wondering if it’s worth living in the one that’s done first for two years and then sell and move into the second one to avoid taxes.

Doing so increases the likelihood of receiving warranties, working with higher-quality contractors, and having independent inspections along the way.

We are close to closing our second deal and it has been an uphill battle.

Although RE has been good to me I'm a fan of total stock market index funds which include RE and are truly passive with the likelihood of significant returns over the long term. 

Can I take a second mortgage on an investment property?

I am not looking to buy my second property soon.

Not a chance in the world I would do a second position loan for only 9%what is the amount owed on the first?

A lot of hard money lenders will not allow that second lien on the HUD but some will.