You definitely don’t have to participate in it if you chose not to.

On top of this, you have to prove that you materially participated in the rental property business for the property to be able to take the net losses in the passive income against the active income (your fiances W2 work).

Thank you everyone who has participated in this forum thus far!

Not really, because you don't know what your final price would be until the auction ends, and you generally have to register with the auction site to participate, and many require you to close in cash, not to mention many investors are already looking there so if you win a bid you may be overpaying. 

Zillow is barely reliable for SF home rent in an area with plenty of comps.

She is a Section 8 participant is only supposed to have 3 people living there.

I would love to be participate and meet other like-minded individuals. 

Download the instructions for SchE and you can read some more.If your modified AGI is <$100k, you can take $25k of your rental losses that year also if have “materially participated” in your rental activities.

Bare with me - If you've read this far you can tell writing isn't my forte.  

Here goes:1) You're right - I'm sitting just (barely) over the 1% rule.