Hopefully, you have been able to gain more advice since then. 

Hello everyone,I'm a beginner real estate investor who is thrilled about the opportunities to build wealth and generate passive income from real estate. 

Tax Benefits: Gains grow tax-deferred or tax-free.3.

If not, even though you are a re pro, losses are passive & deductions are limited.There are 7 scenarios that will qualify as material, and you only need to meet one:*500 hours*Substantially all participation*> 100 hrs and at least 1/2*Significant participation*5/10 years*Personal service activity w participation in last 3 years*Continuous participationTo materially participate, you must be involved in the operations of the activity on a regular, continuous, and substantial basis.Once you pass the pro test, the material participation often comes along for the ride.You can elect to aggregate all rental real estate for purposes of measuring material participation under Sec. 1.469-9(g).Your time spent on all your rental properties (STRs don't qualify) counts as one activity, making it easier to materially participate.In order to make a strong case with your CPA and the IRS you need to document your hours.Best practice is an hours log where you are as specific as possible.

I looked into RealT and it seems it could be OK for passive investing but it seems difficult to sell later down the road - seems there is not much liquidity. 

And in fairness, not worth doing if you're not making more than that anyway.If he does something like this and it exceeds the SGA (Substantial Gainful Activity) limit he would lose his disability right? 

If they have passive losses from the STR, they might be able to offset some of that W-2 income through the passive loss allowance or by qualifying as a real estate professional.

@Clinton BoltonI might look into passively investing in a US real estate syndication.

The BP forum is free and some contributors have nothing to gain and want to see others thrive.

So if you have any additional gain left over after taking the 121 exclusion, including the depreciation recapture, you can shelter the rest in a 1031 exchange.