This works because, for short-term rentals, the IRS rules allow income to be treated as non-passive if certain conditions are met, such as offering substantial services and meeting material participation tests.

If you aren't securing properties at a substantial discount, you may end up maximizing the LTV, resulting in higher interest rates.

It's not liked by most Building Departments because it puts substantially more occupants in a building and each with locked individual quarters and highly taken advantage by slumlords creating fire hazards.

The key factor is ensuring the property qualifies for favorable tax treatment by adhering to IRS rules regarding short-term rentals and material participation.For the 7-day rule, the IRS requires that:The average guest stay must be seven days or less for the property to qualify as a short-term rental.If the average stay is 30 days or less, you must provide substantial services similar to what hotels offer, such as daily cleaning or concierge services.Regarding material participation, to further classify the income as non-passive, you must meet one of the following criteria:You spend more than 500 hours actively managing the rental in a year.You manage the business yourself and spend at least 100 hours, with your involvement exceeding that of any other person involved in the rental.Please note there are actually 7 ways to qualify, the above two are the most common.

So, they would want to know if there was a substantial decline like that.I haven’t seen a change.

Compared to the recent pricing peak in May 2022, single-family home prices in Austin are down approximately 15%.For some broader context, here’s a chart of the median sales price of a single-family home in Austin over the past 10 years:As you can see, pricing in Austin is still substantially above pre-pandemic levels.

Most of these buyers will have to sell at a substantial loss to get out and have so far been unwilling to do that.  

This deal reaffirmed the importance of identifying properties where minor improvements can lead to substantial returns.

Properties in desirable areas or with substantial potential can attract even more investors.

great point in 10 years from now this property will start eating cap ex.. unless the rents per night go up substantially I suspect this will never make money over the long haul.. not sure why a sub 200k house in Pittsburg looked like a good STR opportunity ???