I'm totally ok with the idea of not improving my standard of living substantially, now, though. 5 years down the road I might crave those upgrades more, though.I don't think you're looking at it wrong.

California) the risk profile isn't that much different. 

We've been doing ST Rentals for 4 years and over the course of those 4 years I personally feel AirBnB is continually improving and VRBO's platform is getting less user friendly and they are always finding clever ways to add fees on the user and the guest. 

And even if the items fall under improvements or an asset that needs to be depreciated, you can elect to expense them with de minimis safe harbor if the expense is below 2500 per items. 

if you did inspections of the property during your purchase due diligence, you will probably have a list of deferred maintenance items...you could offer to fix some things or do some improvements, providing that they pencil out for you.

If you make improvements, they probably won't appreciate them or keep them up.

Upon improvement, refinance into conventional (assuming you have the equity).

I've been doing this for 3 years, but am always trying to improve and could use your advice to navigate these potentially tricky waters.Thanks!

I love the improvements VRBO has made in the past year. 

You can find cash flow neutral or positive in Houston (I invest there) and San Antonio, and possibly in Dallas metros in very decent neighborhoods as those are strong economies and growing metros, though those markets may lack the sexiness and tech profile of Austin.