Where STRs differ (and why people talk about them more)Short-term rentals sometimes qualify as an “active business” (if the average stay is under 7 days or you materially participate).

If your partner qualifies for REPS and materially participates (and you elect to aggregate rentals if needed), rental losses can be non-passive and offset your W-2—subject to basis/at-risk limits. 

Lot of pitfalls on material participation, which is what I believe you mean by "actively manage" in this post. 

There are two main tests for the STR loophole:1) Material participation2) 7 days or less is the average stayTherefore, in the real estate world, MTR is usually 30 days and more and would fail the second test. 

That's not the shinny metal getting worth more, it's your dollar getting worth LESS.   

As others have mentioned, structuring the LLC correctly, tracking your hours for material participation, and keeping clear agreements on responsibilities, rent, and exit strategies is key.

At the same time, materials and labor costs remain elevated, and supply chain issues (tariffs, etc.) could further squeeze rehab timelines and budgets. 

This insures that the contractor is not just throwing random # s in their estimate and is accounting for all labor, materials, etc.All the best!

Nice try though.Myth 4: I'm hands-on, so I materially participate"Material participation" is defined by the IRS, not by your Facebook friends and not by YouTube gurus.

- What’s been your biggest delay lately — materials, permits, or financing?