and my fiancee and I are looking to create about $5,000 a month in passive income, so that I can afford to work less and we can travel together during the summers (which he has off).I'm thinking that I should begin by house hacking since we are currently paying 2,000/mo in rent.  

The question is whether or not all parties will be actively involved in the deal (JV/partnership) or if there will be one lead/sponsor/general partner and the rest will be passive investors with expectations of return on their money (syndication).

@Mohamed Nagoor , There is no capital gain treatment for flipping the house.

The reason why I bring up this point is because I have read that in certain circumstances, you can only apply passive loses or depreciation towards passive income and not active income.

If yes, 1) You do not have to exclude the portion of the house for the capital gain.

How passive do you want to be?

Concepts I think I understand are :If the transactions are not of equal value you, you pay capital gains on unused profit. 45 days to identify deal of equal value / 180 days to purchase them. 

This is just scratching the surface of using leverage, gaining appreciation, taking advantage of depreciation while building equity and getting passive incone.Happy to share more details and experience anytime.

For example, I've learned that the state of Vermont will impose a huge "land gains" tax on someone who buys and sells a piece of vacant land that isn't part of their primary residence within a 7 year period.

I've been gaining a lot of knowledge recently which is helping me overcome this fear!