Deegan and @Arda Bircan There are technically 7 Tests for Material Participation (but 3 that are most common) -> the individual 500 hour mark, that the activity of the individual is substantially all, and that the individual participates more than 100 hours + no-one else spends more time than them.Litmus Test: Are your hours integral to the operationsThe hours that qualify must be substantially all hours and have a legitimate impact on the rental activities.Activities that generally count: showing the property for rent, taking tenant applications & screening tenants, preparing & negotiating leases, cleaning & preparing the units for rent, repairs, and improvements, managing the construction, purchasing supplies & materials, inspecting the property, responding to tenant complaints & inquiries, collecting & depositing rents, evicting tenants, writing & placing advertisements, and working on your websiteActivities that don't count: education & research, investor-type activities, and travel time..

I would add more to the budget just in case a repair is needed. 

They maybe did some other cosmetic stuff but not the $20k-$40k he claims he did.Then when I saw they were putting thr house up for rent again without making any repairs I told them I'd be leaving reviews about that house.

Activity DescriptionTenant recruitmentTenant screeningNegotiating and executing leasesOverseeing repairs and maintenanceCommunications with tenants and vendorsTravel timeResearch for potential rental real estate (pub 925)Acquiring rental real estate (pub 925)Paperwork/bookkeeping/bankingResearch and purchase of materialsRent collectionEvictionOn-site cleaningBill paymentOther:Time SpentDate

I have about $300 on my credit cards (just finally paid them off for the most part, and have about $20,000 limit).My cash on hand is relatively light, but what my plan was was to find some single family homes in the north Detroit area (currently anywhere from $40-$60k and put about $15-20k tops into any repairs or fixes (not looking for total rehabs, mostly something I can do some small repairs here and there and paint, personally I am knowledgeable about renovating up until complex electric and plumbing).

Have a good look around the property - if there is any damage they have done (even small stuff) you can give them a 3-day notice to get it repaired.

After the damage to the house he didn't have the money to make repairs so the house became unlivable and he moved out.

I noticed you don't account for repairs, vacancy and capital expernitures. 

Understanding How Real Property Works I am not making the argument to do anything unsafe or that you need to do all of the work on your properties yourself but I believe that understanding how real property works will save you from being ripped off, allow you to prioritize repairs more effectively, and get you out of tough situations by providing you with solutions to problems.Why Basic Home Maintenance Skills MatterCost Savings: Knowing how to do some basic things yourself can save thousands of dollars.

My property was supposed to be turnkey with a long term tenant and the property is supposed be in good condition without needing any repairs.