MTR vs. STR

[Michael Bandur]

Medium-term rentals vs. Short-term rentals? I know STR's have been all the rage for the last couple of years, and when interest rates were low, the ROI was great! I have personally used this strategy for real estate investing. I am now wondering if it is time to change my focus to MTR's. Some markets are becoming oversaturated with STR's and regulations are making it harder to have STR's. What are your thoughts? Which investing strategy would you focus on over the next 3-5 years?

[Bonnie Griffin Kaake]

@Michael Bandur There are opportunities and will be opportunities in both STR and MTR (MTRs are treated like long-term rentals). There are more complexities with the STRs and many, if not most, CPAs/tax professionals are not up-to-date. Often overlooked is that a STR must be depreciated over 39 years, not 27.5. And, if you switch from a STR to a LTR or the other way around, your CPA/tax professional will need to do a 3115 Change of Accounting form. There are other challenging areas with tax filings on STRs that could cause you to pay more in taxes than you need to pay.