New to real estate. STR vs LTR vs both?

Question

Hi!

I am a new attending working as a PCP. My wife is taking care of our 3 young kids (6 mo, 3 yrs and 7 yrs). She is currently not working. We are planning to invest in a real estate with her as a rep for wealth building and tax benefits. I have been actively reading real estate books and listening to podcasts (white coat, biggerpockets) to gain knowledge about finance and real estate (new to all of this). I am 40 yr old. Our goal is to reach financial freedom in 10 years or less if that is possible so we can travel as much as possible since we both love traveling, spend time with kids when we are still healthy/fit while still continuing to work maybe part time or per diem hospitalist gig as kids will get older. Would love to hear peoples journey/stories in real estate investing working full time. Any advises? We are in between STR vs LTR vs both? Likely both. We Airbnb everywhere we travel so my wife thinks she could be good managing STR.

Thanks.

Pierre Guirguis · Answer

Given your situation high income, limited time, young kids the biggest risk is not picking the wrong strategy, it’s taking on something that’s too operationally heavy early.

STR can work well, especially if your wife is interested in managing it, but it’s a real business. It takes consistency and attention, and income can move around more than people expect. That’s fine once you have a base, but it’s not where I’d start.

In Allentown specifically, a small multifamily run as a long term rental is a very solid first move. There is steady workforce demand there and it is a market that rewards simple, well run assets. It is easier to finance, easier to stabilize, and gives you a clean first win.

Once you have that in place and understand your capacity, then layering in a STR makes a lot more sense. The people who hit financial freedom fastest usually don’t chase the highest return on deal one, they build something repeatable and then scale it.

Jeff Roth · Answer

Hi Ang from Allentown, Pennsylvania-

Congratulations! You are a primary care physician and you have been studying real estate investing as a pathway to financial freedom and tax benefits and ask should you invest in short-term rentals, long-term rentals, or both?

This is a great question. In our experience helping investors build their portfolios in Michigan, and many are physicians, they are choosing both.

Short-term rentals, when you materially participate with enough hours helping with the property, you can accelerate depreciation and reduce your W-2 or active income.

Long-term rentals do not offer the same active income tax reduction as they are considered more passive but can still be solid income and wealth creators.

To Your Success!

Aaron Zimmerman · Answer

There's a lot here. For STRs, the question you have to ask yourselves is do you want to be in the hospitality business? If you don't, then that rules that out for you. If you do, you'll need to really run it like A business. It's quite competitive out there depending on the market but STRs can be quite rewarding financially. What I'd add is to make sure each investment is a good investment for you.

Mike Paolucci · Answer

Welcome to BP @Ang Sherpa. STR's can do very well, but like others have mentioned, can be a full time job that will require systems in place to manage a portfolio big enough to provide the financial freedom you're thinking. On the bright side though, if your wife puts in enough hours, she can qualify as a real estate professional (there's an hour requirement to qualify) and that can work out well for your high income earning position. I'd recommend talking to a CPA for that though.

If you're partial to the STR model, I'd recommend looking into MTR's (medium term rentals). They have less turnover (generally more than 2+ month stays) which provides more stability and less wear and tear vs a LTR tenant. You could also look at doing some sort of combo of the two to fill in some vacancy gaps as well.

LTR's are also a great option but numbers these days are pretty tight in most markets.

Ashish Acharya · Answer

Hey,

You’re asking the right questions, especially this early on.

If your wife is interested in managing the real estate side, one of the biggest opportunities to be aware of is Real Estate Professional Status (REPS). It can be extremely advantageous from a tax standpoint.

Assuming she’s able to meet the requirements, primarily around spending 750+ hours in real estate activities and materially participating, it actually doesn’t matter whether you go the STR or LTR route. The key benefit is that the income and losses can be treated as non-passive.

That means any paper losses (from things like depreciation or cost segregation) could potentially offset other non-passive income, including your W-2 income. That’s where a lot of high-income earners see significant tax savings.

From a strategy standpoint, STR vs LTR really comes down more to your lifestyle and operational preferences. STRs can produce higher cash flow but require more involvement, while LTRs are more passive and stable. A mix of both is often a solid approach, especially if your wife is open to managing STRs.

The biggest piece is making sure you’re working with a CPA who truly understands real estate and can strategize with you throughout the year, not just at tax time, to help you maximize both cash flow and deductions as you grow.

New to real estate. STR vs LTR vs both?

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