Your non-passive income is subject to Self Employment (SE) tax and passive income is not.

@Jennifer TaylorYou can create a new LLC, a new IRS Employer Identification Number and open a new bank account just for the cottage.

I'd also love to hear about your journey in real estate and how you got started.To be clear, I’m not seeking funding, employment, or any commitments from you.

@Brent CoombsThe issue I have is that when people keep saying they’re going to employ the strategy or show any interest you keep jumping in and saying “why would you get out of your low interest mortgage?”  

Out of curiosity apprx what percentage of loans are issued to w2 employees vs self employed/small biz owners?

And, residents need employment; otherwise, units are full but some can't pay.In many markets, there's a pretty large jump from C to D class...and in most markets, D class takes very hands on, local management.

That's likely to lead to them referring you to a potential employer.

Conversely, someone with a smaller portfolio might have a WIDE variety of experiences and expertise in a lot of areas because they are hands-on in all aspects of investing and could give you guidance you can employ in ways that suit you best.

The best option for you depends on a number of factors including your exit strategy, any liability concerns and preferred tax treatment.Type of EntityTax TreatmentMain AdvantagesC-CorporationDouble TaxationCorporate tax rates are lowerS-CorporationPass-throughSelf-employment tax savingsLimited Liability Company (LLC)Pass-throughLiability protection and flexibilityFuture Outlook and Recent Tax Law ChangesMost recent tax changes applicable to real estate investors include:The increase in the estate tax exemption to $13.61 million per individual for 2024.

Hire an assistant to screen tenants, show properties, and delegate maintenance calls to above mentioned trades... basically handle it all early on and then build into employing those who manage your properties?