However, this is a difficult qualification to meet, especially if you have a full-time job outside of real estate.Don’t worry if you aren’t able to qualify for REPS status, because there is another strategy that is referred to as a “loophole”, which is the STR strategy.Per Section 1.469-1T(e)(3)(ii)(A): there are six exceptions where your rental property income is not automatically considered to be “rental activity” and thus may unlock the door for being able to offset these losses against your active income.The average customer use is seven days or less.The average customer use is 30 days or less and significant personal services were provided (for example, daily housekeeping).Extraordinary personal services are provided, regardless of the duration of customer use.The rental is incidental to a non-rental activity.The property is available during defined business hours for non-exclusive use by various customers.The property is used in an activity conducted by an S Corporation, partnership or joint venture in which the taxpayer holds an interest.If your property qualifies by meeting one of the exceptions above, the next step is to demonstrate material participation in the rental activity.

Material participation.

That seems like a huge headache, managing an STR from out of state and meeting the material participation hours from OOS.

@Nicole CotrinoKey factors: Do you materially participate in managing the property?

What Im looking for with REI.... is to find financial freedom, to build generational wealth, to bring my family together; my brothers,  my children, and their children into a business Im not only passionate about, but proud of.  

Can a long-distance investor be considered materially participating in their STR property?  

While this isn’t ideal from a transparency perspective, it’s a foreseeable outcome when the regulation doesn’t directly impact flipping economics.The Bottom Line: While AB 968 may promote transparency in theory, its real impact will likely create more complexity and hurdles for sellers of distressed properties and newer market participants rather than significantly altering the business strategies of established flippers.

.- They must be pretty desperate for participating landlords in your area!

Pinata is a popular resource that's free for tenants to use whether or not the landlord participates!

Maybe start finding deals to wholesale, which will sharpen your deal evaluation skills and generate cash for future investments.If you find really good eals, you could even require that you participate or get a piece of the deal.