So you are incurring additional cost with each person you hire.Another important point, if you pay an uninsured carpenter $10k with 1 check, and $8k was material cost, the work Comp Policy considers the $10k as payroll.  

On the other hand, many businesses --- including very large, sophisticated ones --- have no interest in owning real-estate and instead would prefer to lease.

Sophisticated investors usually have a return they want on their investments.

Most M&P sophistication stops at an LLC. 

Plus payroll.

He is a sophisticated investor so should be quite capable of handling his investments.

Once you have employees the game changes; payroll, fringe benefits, health care, HR, vacations, laws, etc.

It's a tricky business, but your brothers model of starting small and growing organically sounds great.So far as your questions;I am an S-Corp for tax purposes and I include myself on payroll, which is a great benefit.Renting machinery is far more expensive, but if you do not have the ability to purchase at this time, it is a viable alternative. 

Using more sophisticated rent gathering methods may cost money and be over-complicated for the house hack. 3.

Eventually, if my portfolio grows beyond my capabilities, I'd rather hire someone and put them on my direct payroll.