In this scenario, I'd do that by testing out these ideas you have before quitting your W2.

My understanding is you do not need to pass the “real estate professional test” for this.This seems like a big loophole for STR investors.

Hi Tj, when starting something new, start with a pilot program with some funds that's not gonna sink the ship even if you took a major lost and test out the water.

Now that the 5% down conventional loan program is widely available (since November last year) I generally recommend using that as opposed to FHA because FHA comes with minimum property condition standards, the self-sufficiency test, and it's less attractive to sellers.

This is done by hiring an industrial hygienist or an air quality professional to come to the property and test the air and surfaces for mold spores.

Personally, I like to run every deal through an easy back-of-the-napkin test before even pulling up an actual underwriting model. 

Find a model that you can run the exact same test numbers through that you trust has accurate measurements of IRR. 

To do that, as long as you don't hit any of the standard tests (just google "material participation tests" to find the 7 tests), you are passive, and you can offset that income with your other passive losses.It will all come down to the nature of your involvement. 

If you are doing a FHA loan on a 3-4 unit you will need to pass the sustainability test which can be a bit hard these days in Portland. 

This is a test of your risk tolerance.