Tax benefits can help make a better business deal, but a bad business deal is hardly ever going to break even just because of tax benefits.The other big consideration you should have, in order to actually benefit from real estate fueled losses or credits, it will require a substantial investment of time - either to get over the material participation thresholds for short term rentals, or to get over the real estate professional thresholds for mid term /  traditional rentals. 

I could raise rent but with them it seems I'd just forever be raising rents to just barely cover repairs. 

If you cannot believe we're having this conversation maybe you don't need to participate in it.

Whereas a kitchen, guests may barely even spend time in.

So, they have barely an inkling of how to work with an investor to find "deals".Of course, most of the newbie investors don't know what a "deal" is either, with many of them willing to pay asking, or above asking prices.

To use a 1031 to pool money you need to either, A) Find a syndicator willing to use a 'tenants in common' structure, or participate in whats known as a Delaware Statutory Trust (DST).

It worked fine for basics, and I even did some barely passable permit drawings on it, but it is by no means pro-quality.  

Ive seen so many investors leverage themselves to the max and be barely successful.

There is some confusion about material participation hours.First off, you need to keep track of your time.

From an exposure to liability, in the sense of how much a party can be responsible for action/inaction can come down to the participation for that business.