Has anyone filed taxes yet as a W-2 employee who owns only STR, rents for on average less than 7 days per rental (STR), and materially participates (usually requires 100 hours or more in a year and more than anyone else)I’ve heard there are amazing tax benefits if you fall under all of the categories.

I’m coming up with: $4600 monthly rents$450 insurance $950 taxes $690 Cap ex, Maintenance and Vacancy 5% each $400 water/electric from current financials $130 landscaping from current Which leaves me right under $2000 for a mortgage payment just to break even, which is a purchase price of $375k with 25% down.

However, I don't like the potential constraints with growth on this (territory size, royalties, franchise fees, etc).I also like the idea of starting my own business from the ground up. 

They are application fees, plan review fees, maybe/maybe not impact fees (tens of thousands of dollars paid to the local government so you can develop a raw land), permitting fees, rezoning fees if rezoning is required. 3.)

At a glance, it's just Quicken 2.0: advertise a great rate, bury in the small print over $10k in junk fees per $600k borrowed.

Quote from @Laura Kreinbring: Yes, you’re right about the “weeds”It’s tax code weeds!

DSCR loans typically have higher rates, pre-payment penalties, and may not let you pull as much money out as you would like because they will be based on 2 factors: the appraised value of the home and how well the rent coming in can cover the PITI payment each month (Principal , interest, tax, insurance). 

The structure we landed on was as follows:- Fixed Builder fee of $300k (each project varies but are 2-6 units, and 5,000-9,000 total finished sq ft)- Fixed Return on all my initial capital invested of 50% (plus return of 100% of initial capital)- Remaining Profit Split of 60/40 (60% to me, and 40% to him)I understand a lot of this hinges on how accurate the proforma is and how close we can get to actually hitting our development costs estimates, build cost estimates, and sales per sq. ft. estimates.

Agency - as expected, always the best rate and lowest fees.

Why not sell at a stepped up basis and pay zero taxes Uncle Sam?