Fees for unpermitted work are hefty (twice the regular permit fee), and the enforcement division is definitely out and about, and they will definitely make you rip out any unpermitted work if you get caught, so consider the risk by all means.

My understanding is that there are several 'test' to meet this; 1) My non real estate income will always be under 100K (not sure if that matters for this purpose), 2) I have to spend more time doing real estate than what you spend in my 'regular job' 3) I have to put in 750 hours per year, or at least that much in 5 of the previous 10 years. 

If no violations are found during a rental inspection, the L&I Commissioner may delay the next required rental inspection one additional year from three years to four years.Change the fee assessed for a second rental re-inspection from $25 to $125.Add language reiterating that regular rental inspections are a condition of a City rental business license.Add a civil fine of $500 per rental unit for failure to register/obtain a rental business license.Add a civil fine of $250 for each violation of the housing code if the violation relates to a rental property or a vacant property.

But you have to run the numbers specific to your situation and scenarios with an experienced CPA to see if you gain any advantage and when/how.Depending on how much income you have, you can set up retirement plans (checkout Solo 401K) that would give you more (higher contribution limits and more flexibility) than regular job plans. 

@Max Sawyer - If it was a regular tenant - I would make them pay.  

Price matterS So, you just let people back out of contracts on you on a regular basis?

Additionally, net investment income does not include any gain on the sale of a personal residence that is excluded from gross income for regular income tax purposes.

I'll be checking these out for a funding source as part of my due diligence for real estate investing.I decided to forgo long-term care insurance because too many of these insurance companies went out of business and the policy holders ended up with nothing to show for it (health care inflation is much higher than regular inflation).

I am planning to use regular bank financing with 20-30% down.

There's regular houses, but nothing comparable that will accommodate groups, with a pool, etc.