If that is the case, they either use a loophole or are trying to do it under the radar.

That means that you can not stay in the properties owned by the 401k (there are no loopholes around this rule).

If you're trying to use the "short-term loophole" to make the losses offset your non-passive (W-2/business) income, you have to have some guest stays to establish that the average guest stay is 7 days or less.  

And again this is where you have to go back to the intent of the legislation, it wasn’t to have more double closing’s, it was to stop shady individuals from stealing equity from old people, and agian just because you can maybe find a loophole in the law doesn’t mean a judge or jury is gonna interpret that way.The terms I am using are totally irrelevant to the law? 

It is so screwed up that it opens a lot of loopholes.

where would the money come from if I was to have an agreement for Seller Financing? I currently don't have any money, credit score is fair, but don't want to bother with the banks. is it possible to get money somehow ...

Neither of us will be able to get the real estate professional status nor will we be able to make use of the STR loophole.

So, both my wife and I are full time W2 employees and are in the 24% tax bracket, and I came across the short-term rental loophole which sounds really amazing for taking write offs and using them to reduce your W2 taxable income, but also equally difficult to qualify for, unless you are within a short driving distance to your property.  

That seems like an easy loophole that might not be allowed.

Definitely not a loophole and not what we call a tax strategy.Tax-wise, here're a couple of posts explaining the general tax consequences of real estate syndications:https://www.biggerpockets.com/forums/51/topics/839015-are-sy...https://www.biggerpockets.com/forums/51-tax-legal-issues-con...