Real estate, by default, is passive and the primary way to avoid the passive loss rules is to qualify as a real estate professional.Full-time employees and non-real estate business owners cannot qualify as a real estate professional (aka REPS status) because one of the tests is to spend more time in real estate than anything else (and it’s unlikely that you can convince the IRS or Tax Court that you spent more time in RE than your day job).

I would evaluate at least 5 properties if there are that many in the area.  

They will evaluate critical factors like land grades, water and sewer systems, and overall feasibility.

I have a written office policy manual that explicitly permits my employees and sales agents to carry at their discretion.

I knew it was a unique real estate market .. but sadly all the risks I evaluated were correct.

I recommend AirDNA subscription for picking and evaluating both markets and individual properties, a little pricy, but if you are taking the investing seriously and with a long-time horizon, definitely worth it in my opinion

With your strong equity, consider refinancing to improve cash flow, selling a few properties to reduce debt and build liquidity, or re-evaluating rents and exploring short-term rentals for better returns—all while aligning with your long-term goals.

Generally your hours working at BP as a W-2 employee would not be part of RE professional hours unfortunately.For those who are RE professionals, gain on sale of rental real estate is still capital gains and still avoids self employment taxes just the same for those tho are not REPS so there is no downside to being a REP in the example you provided Scott. 

My wife and I are currently evaluating a 9-unit MF in my old hometown.

Here are some key criteria for evaluating a Cost Segregation provider:- Seek out a Certified Cost Segregation Professional- Consider their experience with tangible property regulations.