With all the new regulations around documentation for cost segregation that has come out, I recommend having a professional do them.

Just ensure that your increases comply with local rental laws and regulations. 

If booking off an OTA platform you definitely need to protect yourself especially if your state has tough regulations that side with tenants.

@Mike Calvey you have a ton of information in all of the responses you have received so far so I will say one thing.Make sure that your friend is clear on the Fair Housing Regulations especially if renting in Colorado.

Your answer would be it depends on a million things.Like the specific property, its condition, location to desirable areas, local STR regulations etc.We would need much more detail to be able to help.

See https://library.municode.com/tx/killeen/codes/code_of_ordinancesChapter 26 is known as "City of Killeen Subdivision and Property Development Regulations."

And anything over 31 (some cities do 30 so verify) days is considered MTR and typically has less regulations. - Short-Term Rental (STR) License - Littleton CO - The shorter the stay, normally the higher the revenue but also higher work with turnover, etc.You'll also want to check zoning laws to see if you can legally have it be a duplex if you move out. 

https://www.phila.gov/CityPlanning/resources/Publi...pg 40/41"[1] When the proposed use is in an attached or semi-detached building, the household living use regulations of the residential district to which it is attached apply.

Unsuccessful Property Search: Hours spent on unsuccessful property searches, where no purchase is made, do not qualify.On-Call Periods: Instances where you are on-call but do not actively perform work do not count towards material participation.Meeting Requirements:Maintain Detailed Records: Keep accurate time logs and records documenting your involvement in material participation activities, supported by evidence such as emails and calendar appointments.Seek Professional Guidance: Collaborate with a qualified tax professional to ensure compliance with IRS regulations and to optimize your material participation strategy.I hope this high-level overview gives you insight into what activities matter and ones that do not.

If STR regulations come to the area, my plan is to do MTR and while it is not as much revenue as STR, I should be able to generate a decent return over a 5 year minimum hold.