I work for CSSI (Cost Segregation Services LLC), which has done over 60,000 engineering-based cost seg studies since 2003. About 30% of our studies are on STRs. What I've learned is that the KEY differentiator when it comes to the percentage of the property that qualifies for Bonus Depreciation in an STR is the amount of 15-year Land Improvements. Any assets in a Cost Seg study that are allocated to less than 20-year depreciable lives, qualify for 100% Bonus Depreciation under current tax law. In a Cost Seg study, the percentage of assets that get allocated to 5-year (internal) depreciation is fairly consistent across STR properties, whether they be homes or condos (QIP which I mention below is the caveat). That is not true for 15-year assets. Condos have very little Land Improvements such as driveways, fencing, patios, pools, landscaping, docks, etc. that qualify as 15-year depreciable items. The more of those things you have in an STR, the better for increasing depreciation deductions and Bonus Depreciation. One other lesson learned regarding Cost Seg studies on STRs and exterior assets -- a deck that is adjoined to the house is considered part of the structure and does not get allocated to 15-year asset category. If that deck is separated from the house, it would get 15-year asset allocation. One final note, this one regarding Qualified Improvement Property (QIP). If you buy a property that has been used as a commercial property, STR, or Long-Term Rental in the past, then come in and make internal, non-structural, upgrades such as flooring, painting, kitchen and bath upgrades, lighting, and many other things to the interior of the original footprint, the majority of those improvements are QIP upgrades and get 15-year asset allocation and 100% Bonus Depreciation. You can accomplish the same thing if you buy a property that has never been used as commercial or rental property in the past, but you must use it as an STR for a few months after purchasing it, then make your QIP upgrades.

What explains the almost $100k difference in Projected revenue with AirDNA and strIQ for the same property? When looking at comps, this has a HUGE impact on underwriting for a current deal I am working on

When do you make an LLC to hold your STR? Shouldn’t you also make a holding company to hold the LLC?

I'm happy to be join the group as a realtor who has a team that is focused on vacation rental home investments in the Pocono Mountains of northeast Pennsylvania. We work primarily with small investors who like our region due to its proximity to NYC and Philadelphia. If you have any questions about the Poconos, I'm happy to help.

Hi, my name is Julia. My husband and I live in Philadelphia. I would say that we are in the hunting phase.actively looking. I would like to make an offer on our first STR within a month. We are downsizing, having recently sold our suburban home and getting ready to move to a smaller place. I want to get into STR investing in order to build an alternate income stream as well for the tax advantages it offers. (yup, first STR will likely be in the Poconos)