I had hoped to offset it with my capital loss carryover and haven't planned for any expense documentation etc. can I make the case that I am not a dealer because this is my first time and also have a high w2 income relative to the LLC profit? 

I don't do it willy nilly because it compounds the expense.

My opinion doesn't change, this could be a very expensive ommission.  

I bought my first property a few years ago, but life (and COVID) put my real estate plans on hold.

I plan to simply get my permits and get the unit built.

The paid off student rental plus the 2nd student rental helps pays off the mortage for 2nd student rentals and living expenses for me and my wife. the duplex was  cash flowing approx  $300 month with the old tenants We manage everything ourselves with some help from our family. 

Houston has its expensive areas but pretty affordable overall. $500K gets you a 1969 split foyer in a decent neighborhood in my area .

I know a lot of investors have done very well in Peirce County but I just haven't learned or know enough about that market to make an investment there.Washington state properties are expensive and can be difficult to make breakeven let alone cash flow at this moment due to the combination of high prices and interest rates. 

Houses are expensive to keep up.b.  

However, I had to subordinate the sellers note to 2nd position (hint: set up that language in advance to streamline the process, if that's the direction you're going to go).Since the ARV was high enough, and the potential income would support the mortgage and expenses, it all worked out.