The property wasn't underwritten, the homeowner saw money signs instead of reality, the market and guest avatar weren't researched, and good chance the furniture and decor were 15-20+ years old.

2- If I employ a full-service property manager to handle tasks such as cleaning, maintenance, booking, and guest communication, while I focus on business aspects like property search, renovation, decoration, bookkeeping, and supply procurement, would this still qualify as material participation or could it pose a risk?

Also best place near Tulum to buy Artwork and other decorative items?

You did a great job decorating it and photographing it! 

The decor doesn't need to be expensive, she thrifts a lot of vintage pieces and orders the majority of soft materials and bedding/mattresses from Amazon, but you can feel the difference between a professionally catered home and a less curated space. 

I invested in the décor, the amenities, and it works out fine!

There is a decorative grate you can put over that but I don't think they make it baseboard insert width. 

I decorate with things that appeal to that demographic.

They are decorated first class and have first class amenities. 

Be honest about comparable locations, layout AND decor/amenities you would furnish it with when you're comparing the pricing.