You materially participate in an activity if you're involved in the operation of the activity on a regular, continuous, and substantial basis.

., while John has a lot more experience than I do, and no real estate investor wants to be a restaurant operator, there are some upsides to Option 1, as I see it.The lower base rent could allow the Option 1 tenant to remain open throughout a recession, while option 2 may decide to close down the sales drop, if rent is too high.But beyond that, are a lot of factors that I would assess:Who is the actual guarantor on each lease?  

In my case, I just purchased my first out-of-state property and plan to operate it as a STR. 

If you are going to invest, make sure you know the operator well and that they are reliable.

Thanks all, only clarification is I’m making money in Summer, and apologies for miscommunication - I meant on average (annually) I’m losing 5-10k so realistically will lose $75k on it first 12 months operating (but created about $800k of equity).

Currently I’m operating it as a STR, but I need a new cleaner and the quotes I’m getting are in some cases double my nightly rate, and the amount it grosses is only slightly more than what it will do as a LTR.

Any feedback/suggestions are always helpful, and I think you could find it beneficial for your operations as well.

Hi @Keenan Smith One thing to remember when you are getting into RE investing is to have your team of people or as Brandon Turner from the Bigger Pockets Podcast calls it your CORE 41.

What MAY make sense is to setup a Master LLC that operates like a PMC and collects all your rents, pays all your property-related expenses, etc. 

Standard PM software just doesnt have the sales features to keep up with operations and tools like Follow Up Boss are not geared towards PM's to do thier actual job.Would love to hear yalls thoughts.