The only requirement is that it be Material Participation and you have to record the time. 

We have had significant interest from our inner circle but nothing has fully materialized. 

However, if you or your spouse materially participate (e.g., 100+ hours and more than anyone else), you may qualify for the STR loophole, allowing depreciation and losses to offset W-2 or active income, even without Real Estate Professional status.

You would need 750 hours and more than half your time (this could be you and your spouse).additionally, you would need to materially participate in your rentals.

A taxpayer will be considered a real estate professional if (1) more than one-half of the total personal services the taxpayer performs in trades or businesses are performed in real property trades or businesses in which the taxpayer materially participates and (2) the taxpayer performs more than 750 hours of services during the tax year in real property trades or businesses in which the taxpayer materially participates.  

We both materially participate in our rentals (>500h between both of us).

Active participation isn’t the same as material participation (defined later).

This means the average stay at your property cannot be more than 7 days, you will need to pass the tests of Material Participation or being a Real Estate Professional, and keep a log of the hours you spend performing “activities” for the real estate.In order to Material Participate, you need to pass one of the seven tests for Material Participation on the property.

These committees will comment on everything from color and material selection to landscaping choices, sign placement, awnings, etc.

Tax Strategy: Use the STR LoopholeIf your average guest stay is 7 days or less and you materially participate (spending 100+ hours and more than anyone else), the IRS treats your rental income as active, not passive.