The law was written specifically to close this otherwise obvious loophole. 

But these properties will likely appreciate nicely.

Everyone wants to live in a nice house , in a safe area , with good schools .

that is always the first questions- if they have more time than money, then a rehab project... if they have more money than time... then I would recommend a turnkey property and get them 2 nice properties out of state. 

That's typically where you'll find a nice combination of the better school districts, sales prices, and rent prices.

Nice area of the city but the buyer will likely be inheriting rent controlled tenants.

Hot tubs, pool tables, movie rooms, kayaks and canoes, bikes, games, nice comfortable beds, smart TV's, video games, well stocked kitchens, etc.

We have a huge house we purchased at a nice discount.

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.

Also many lenders will want to see you have some nice reserves like 15-25% of the purchase price on your first deal.