The IRS classifies a Real Estate Professional as an individual that spends a certain amount of time in real estate activities. That doesn't necessarily mean that you have to become a real estate sales agent. You just have to engage in activities such as renovating, leasing, developing, or locating for your own real estate portfolio.
But what is the benefit of having this designation? Real estate investments are a great way of creating cash flow that isn't taxable. How you may ask? Well there's this thing called DEPRECIATION, which is a non-cash deduction allowing you to reduce the amount of a taxable income. Therefore you can create a monthly cash flow by investing in rentals but have "paper losses" meaning for tax purposes, you're loosing money. Perfect if your income is less than $100k since you can take up to $25k in real estate losses per year against other income. If you make less than $150k, you can take an incremental loss and slowly phases out.
However if you qualify as a Real Estate Professional, you can take UNLIMITED amount of real estae paper loss agains your other income, no matter how much you make or how much the real estate loss is. WOW! If you think you can pass the sniff test on reaching this designation, talk to your CPA to verify.