That might mean a large tax write-off IF the owner is a real estate professional (otherwise passive loss rules apply).Since your brother owns another business it is doubtful that he would be able to qualify as a real estate professional, but if he is married his spouse might. 

So again, we are using a business practice that works which is limited by how much it can scale, and that once again puts a hard cap on how many units we can run successfully and how passive this business can really be for us.

Hi there,I am selling a rental property (H1) and would like to avoid paying capital gains.

Lane Kawaoka, another fellow Hawaii native, has a great podcast I listen to called Simple Passive Cashflow.Good luck on your journey and don't hesitate to contact me if you need any help!

Why would selling provide "probably mostly" tax-free gain?

This provides the borrower and incentive to not re-default since they are gaining equity as their deferred balance is reduced 

But for folks who work full time or more, live in pricey markets, or just want something more passive, turnkey can make a lot of sense.

My long term goal is buy and hold so I have passive income that will allow me to enjoy my family and support somewhat high-end lifestyle.Thank you for your help and input

My plan is to manage those vacation rentals at a 30% cut each, and racking enough luxurious properties under my belt to add another stream of passive income. 

@Greg Scully I would plan to manage myself for the first few years to gain the experience.