General feeling about STR loophole for college cost offset

[Philip W.]

Talking with a specialist in this for help sourcing and managing a STR for the purpose of income of course, but also exploiting the depreciation loophole for tax saving and FAFSA reporting for college financial aid etc etc.

I'm pretty confident in the logic behind the loophole, just not experienced in the STR market. I've heard a lot of horror stories lately but I also know it's highly localized. As with all RE, location is everything.

My concern is economic downturn. Assuming we're heading into some headwinds, is this a wise direction right now? Still doing research but would love to hear from anyone that has experience with STR's during an economic downturn. We haven't had many sustained since 2009. Anything I should be aware of beyond the usual? I'm aware that I need to research the local regulatory climate and market saturation. What else ya got?

[Andrew Steffens]

I would 100% recommend consulting your CPA, and/or a CPA that specializes in Real Estate and may have some experience with the FAFSA. That said, STR's can still cashflow in 2025 and beyond but you will need to choose a market that is not totally saturated and do your analysis carefully. Likely a cookie cutter average home will not cut it, it likely has to be well located and extremely well outfitted. Even then it will have ups and downs over the years likely moving with the national and local economy. I think you should not buy an STR purely for the tax advantages but they should be a plus, otherwise it is the tail wagging the dog.