From my understanding, if its passive income, just a room-by-room rental, it would go on your schedule E just like any other rental. if its active, like a short term rental situation or mid-term, something like an airbnb or bed and breakfast where you're actively including extras, it would be filed on a schedule C. disclaimer, im not a tax person, so double check this with your tax pro. when you go to qualify for your next purchase, whether that's for primary or inv., using a full-doc loan... if its schedule C, you would need to do a 2 year average of this income in order to use it. its looked at as a business, and self employment income. if its schedule E, theoretically you could use the schedule E income calculations just like any other rental even after the first filing.

Chances are your rate would more than double here.  

It won't make sense for every traveler, particularly for a single, business traveler only staying one night, I might argue that STR's wouldn't make sense.But for a family of 5 that would have otherwise had to share 2 double beds and call in a cot from the front desk, it's a no brainer.My family of 5 was able to book a condo on the beach for 4th of july for 4 nights, about $250/night all in!  

I am waiting to get new quotes from other contractors but I have a feeling they will charge double his cost.

This means you've doubled your initial equity.Once these two events occur, the sale of the property should double what you had before the sale. 

I would double or triple check your numbers, though.

According to our internal MLS, Tulum has close to double the presale projects that Playa currently has, and a significant number of units coming to the market in the next few years.

But just find a good investor agent, see some homes, run some numbers, buy a solid single or double and see how it goes. 

As we all know material costs did go up, did contractors decide to double as well?

Still double check.)