Can you still acquire a 2025 STR for the Loophole? - Yes but it is Now or Next Year

[AJ Wong]

For those keeping eyes on the calendar we're in the 37th week of the year with just 15 weeks to go! 

Considering that typical residential real estate transactions take 4-6 weeks to close and usually (at least) the same time prospecting..in order to allow for material participation and bookings - it's now or next year for 2025 STR acquisitions.

On the ground here in Oregon we've seen a dramatic increase in the intensity of both interest and prospects going under contract. For example an oceanfront property with a transferrable STR permit went pending in one week..and at least 5/10 of our top luxury STR prospects are off the board..

Advice to anyone, anywhere on how to close a (healthy) STR on a tight timeline:

- First and foremost - perspective: Acquiring a turn-key (particularly luxury) STR in real estate terms is the equivalent of purchasing a Ferrari. Expect to pay a fair price (if not a marginal premium) as the fundamental economics are: supply and demand. There are substantially more investors seeking prime STRs than there are STRs. Point. Blank. Period. That is not to say you should not have a plethora of preparation and validation for your offer and expectations in the form of: projections, financials, expenses, insurance, mortgage quotes, comparative market analysis' and inspection reports to validate the investment.

- Second tier perspective: In real estate and tax terms - investors seeking an STR with less than four months to close and participate is an 'emergency' acquisition - similar to a patient in need of surgery. The ambulance lights are on, the peddle is to the floor and you better have a reputable surgeon (ie: Experienced STR BROKER and team) that you're confident in to support your prospecting, negotiating and post closing.

- Thirdly: Mortgage rates are declining. Primary home purchasers can find 30 year mortgage with a 5 in the front and we personally anticipate rates to be considerably lower in the coming months..so candidly 2026 is not going to get any easier and our suggestion is for investors to seize the transition from higher to lower rates. 

Now for the actual advice: 

- Have a tight buy box. Know precisely what you want (and what you don't): Age, bedrooms, views, furnished/unfurnished. Be specific, start a spreadsheet and expand the criteria to a slightly larger geographical location. If your search area and criteria are tight enough there are likely only a handful of prospects. Begin with those - visit them physically or visually quickly and determine if any are genuine prospects or cross them off - quickly. A quick no is as valuable as a yes..and pivot only as needed. 

- Timing. In real estate, days are weeks. Try and visit or tour prospects yesterday if possible. Things change quickly and top prospects are likely to have considerable interest - if not outright multiple offers. My advice to our investors is to tour any worthwhile prospects that checks the above buy box - as close to it coming to market as possible..and MAKE THE OFFER (on your terms) an offer doesn't mean that parties can reach terms..but you never know unless you try and be reasonable with (data based) expectations. 

- Out smart the competition..Much of this will be dependent on the team that you work with. A very seasoned STR Broker should have familiarity with the market to the point of identifying prospects that could be asking too much, or likely to sell above the asking price (if multiple offers). There are a few ways to make your offer more attractive including: Not asking for concessions or credits. Allowing the deposit to go 'hard' after the contingency period. Adding an escalation clause. Or in rare instances - compensate your broker directly.

- Due diligence. Due diligence. Due diligence: Also an area that a licensed and experienced professional should be able to contribute a lot of value is by helping investors to focus on only active or licensable STR properties. The BEST way to do this is to contact the planning department that regulates the specific property you're looking to operate as a nightly rental. There is nothing worse than investing timing and money into inspections and appraisals only to discover that the property is not eligible for the intended usage. Verify and re-verify during the contingency period.

- Buy for oneself. The hard reality is that tax incentivized investors don't 'have' to buy. It's an option, that on the right terms and for the right property - is investable. My guiding light to ALL clients when deciding where and which property to select is an asset for themselves. An investment that is made into a 'home,' for themselves and is shared with others - for a fee. Purchase a property that you enjoy, in a location that you would actually spend time in and others will be willing to do the same. Be reassured that the barrier to entry (assumedly everywhere) certainly here on the coast is increasing..ie: it isn't getting any easier to acquire a legal and zoned STR. And if you purchase a property that you would personally utilize, you just never know how it might come to be needed or utilized over an anticipated 5-10-20 years of ownership. Example: Many of our clients have utilized their coastal homes during periods of intense wildfires or related smoke in their primary communities. If you always wanted a cabin in the mountains or a coastal cottage, or a house in the FL Keys...the next few years are a good time to make it happen.

- Decisiveness. It's cliche...but more is lost by indecision than bad decision. If rates truly go the way we anticipate - in many areas home prices are going up..not down for prime real estate. For STR investors - our guess is that next year is likely to be the strongest demand (and potentially lowest inventory) of the last decade. Any investor considering or in a position to benefit from accelerated depreciation is smart..executing a victory requires strong strategy, teamwork and action.

Good luck! 

[Jeff Chisum]

You left out get pre approved ASAP.  Unless I missed it