What to Expect Going into 2027?

Scottsdale, Arizona
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What to Expect Going into 2027?

Mason WeissBusiness Member
Realtor · Phoenix, AZ · Member since 2021 · 536 posts · 246 votes

This year, I think the most advantageous real estate investing strategy has been acquiring a short term rental for bonus depreciation. With high interest rates, and low cash flow spreads, investing in long term buy and hold rental properties seems to be not worth it. I think the trend will continue into 2027.

So far this year, I have helped 15 investors gain massive tax benefits off their W2 income or business income by purchasing a short term rental. Taking a six figure deduction has provided more cash flow than they could ever get in other real estate strategies. Now we still want the properties to cash flow or at least break even, but that is why the Airbnb transaction market has stayed competitive and more balanced whereas everything else has switched favorably to a buyer's market in the greater Phoenix area.

Anyone else having this in their markets as well?

[email protected]480-818-7745
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Lee Futcher
Technology · Vancouver, BC · Member since 2026 · 254 posts · 64 votes
4d

Hey @Mason Weiss,

Fifteen investors in one year is a lot of people you've helped, and I can see why the bonus depreciation side is so appealing for someone with a big W2 income. A six figure deduction in the first year is hard to match with a long term rental at today's rates.

I'm not a host myself, but my wife and I have spent the past four years living mostly in short-term and monthly rentals, so I see these properties from the guest side. I think the part that sometimes gets lost is that the tax benefit usually depends on the owner being genuinely involved in running the place, and that's a real commitment for someone who already has a demanding full-time job.

If I were helping a buyer in Phoenix today, I'd sit down with them before they close and map out a normal week at the property: who answers guest questions, who coordinates the cleaners and turnovers, who handles a broken AC in July, and how they'll keep a simple log of their hours. It only takes an hour, but it gives them a clear picture of the time they're signing up for, so the deduction and the day-to-day work both line up with what they expected.

Best of luck heading into 2027,
Lee

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  • Lee Futcher
    Technology · Vancouver, BC · Member since 2026 · 254 posts · 64 votes
    4d

    Hey @Mason Weiss,

    Fifteen investors in one year is a lot of people you've helped, and I can see why the bonus depreciation side is so appealing for someone with a big W2 income. A six figure deduction in the first year is hard to match with a long term rental at today's rates.

    I'm not a host myself, but my wife and I have spent the past four years living mostly in short-term and monthly rentals, so I see these properties from the guest side. I think the part that sometimes gets lost is that the tax benefit usually depends on the owner being genuinely involved in running the place, and that's a real commitment for someone who already has a demanding full-time job.

    If I were helping a buyer in Phoenix today, I'd sit down with them before they close and map out a normal week at the property: who answers guest questions, who coordinates the cleaners and turnovers, who handles a broken AC in July, and how they'll keep a simple log of their hours. It only takes an hour, but it gives them a clear picture of the time they're signing up for, so the deduction and the day-to-day work both line up with what they expected.

    Best of luck heading into 2027,
    Lee

    1Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 4k+ posts · 3k+ votes
    4d

    Hey Mason

    I am seeing almost exactly the same as what you are mentioning in the Tampa market. I have sold 22 STR's this year with another 5-10 hopefully closing before EOY. I am also in agreement that STR is one of the best strategies due to the current tax benefits. It is very possible to positive cashflow positively at a moderate level and when combined with some to most of the down payment being effectively subsidized by the IRS it is very powerful.

    When speaking with a new client about the general market it is challenging to explain to them the market is NOT soft for STR's. The fact is STR's by definition are in highly desirable areas (i.e. near Gulf Beach or downtown areas) the general market for these assets have been pretty flat the past few years during the high rate times since a big boom during COVID. Adding in the turnkey ones with a high rate of performance and the amount of buyers in the market for them, these are moving pretty well as long as they are solid assets with good performance at a reasonable asking price. Unfortunately the news and Zillow articles make potential buyers think its 2008 and sellers will accept any lowball offer we throw at them and that is just not the case in the already developed areas. That said, if you are in the market for a suburban house in an overbuilt area 40-45+ mins from the attractions with 0 STR potential, you can get a hell of a deal right now!

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  • Eugenia ChetverechenkoBusiness Member
    Accountant · Chicago, IL · Member since 2026 · 19 posts · 3 votes
    3d

    Mason, interesting to see how much tax strategy is influencing investment decisions in your market. I'm seeing more interest in STRs from higher-income clients for similar reasons. Curious, are most of your buyers specifically looking for properties that qualify for the tax benefits, or are they already interested in STRs and treating the depreciation as an added advantage?

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  • Rati Meskhishvili
    Tbilisi, Georgia (country) · Member since 2026 · 27 posts · 7 votes
    3d

    Hey @Mason Weiss

    I am curious how the math looks for your buyers after year one. Rough example: a cost seg study puts USD 150k of a cabin into year-one bonus depreciation. At a 32% bracket, that's about USD 48k less tax and only once. If the cabin runs USD 1k a month short, that covers 4 years of losses (at USD 2k a month - 2 years). After that, it is back to the cash flow, and part of the deduction comes back as recapture when you sell.

    The other thing I would check is material participation. As I understand, The loss only offsets W2 income if the owner materially participates, which usually means 100+ hours and more than anyone else (cleaners included), or 500 hours. With a full service manager that is hard to show. How many of your 15 self manage or use a co-host so they qualify?

    (Not a CPA, I used AI tools to help run the numbers)

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    • Mason WeissBusiness Member
      OP
      Realtor · Phoenix, AZ · Member since 2021 · 536 posts · 246 votes
      3d

      Yes some see it through that lense, most are self managing, I work with many high income earners so they also consider the scenarios of swapping these properties to a long term rental down the road if they can get suitable numbers.

      [email protected]480-818-7745
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  • Clifton HarrisBusiness Member
    Property Manager · Pigeon Forge, TN · Member since 2026 · 24 posts · 3 votes
    3d

    @Mason WeissWe're seeing many of the same trends in the Smokies.

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  • Michael GonzalesBusiness Member
    Real Estate Agent · San Antonio · Member since 2018 · 36 posts · 14 votes
    3d

    @Mason Weiss - seeing a lot of the same interest in San Antonio. With 100% bonus depreciation back for property acquired after Jan 19, 2025, plenty of W-2 earners are asking about STRs. A couple of cautions I give people: the 'STR loophole' only works if the average guest stay is 7 days or less and you materially participate, so get a CPA involved before you buy, not after. And the property still has to make sense without the tax benefit, because the deduction is a one-time thing and the mortgage isn't.

    Local rules matter too. San Antonio requires an STR permit and puts extra limits on non-owner-occupied STRs in residential areas, so check the exact address before you fall in love with the numbers.

    I own a few STRs here myself and help investors buy them as an agent with eXp. As long as you run them well they tend to cashflow 3 to 5 times better than my long term rentals.

    Also note, for someone who has done several cost segs and done some back calculations from purchase price to earned income paper loss - the numbers work out to ~27% of the purchase price (e.g. Buy a $380k asset, write off about $100,000 of earned income) but can very a few percentage points based on what features your property has and the land value.

    1Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3d

    The STR deduction is just the tail wagging the dog.

    The primary input still needs to be rooted in the fundamentals. What to expect in 2027? 99% of the folks here got 2023-2026 all wrong. Wrong place to ask, the better question to ask is what known variables am I able to extract the best out of over time--clearly you have by (over)selling this strategy-- now you need a reasonable way to keep business not just get one sucker at a time.

    There's  lots of bridges you can develop, honestly. 

    0Reply
    • Mason WeissBusiness Member
      OP
      Realtor · Phoenix, AZ · Member since 2021 · 536 posts · 246 votes
      3d

      Depends on the income level of your clients, some investors are playing different games than others.

      [email protected]480-818-7745
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    • V.G JasonPro Member
      Investor · Member since 2022 · 3k+ posts · 3k+ votes
      2d
      Quote from @Mason Weiss:

      Depends on the income level of your clients, some investors are playing different games than others.

      Completely missing the point.

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  • Myrtle Mike ThompsonBusiness Member
    Realtor · Myrtle Beach, SC · Member since 2016 · 354 posts · 205 votes
    3d

    @Mason Weiss I can echo that sentiment for the Myrtle Beach market. Whereas in the COVID craze of 2020-2022 we had a ton of newbie investors jumping into lower-priced (under $250k) oceanfront condos and other STR options seeking high ROI cash flow, the clients I've been working with lately are mostly high W-2 earners who are more focused on tax strategy. The right $400k property with $100k down can be a total gamechanger when a cost segregation study is implemented, and I've been working on aligning myself with trusted CPA's and lenders who can seamlessly deliver this strategy for my clients. I completely agree with your assessment that bonus depreciation will be a main driver of investment activity in 2027.

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    • Mason WeissBusiness Member
      OP
      Realtor · Phoenix, AZ · Member since 2021 · 536 posts · 246 votes
      2d

      Couldn't agree more. And maybe it pivots in the future with a change in government we could see bonus depreciation be reduced from 100%. These are the elements that are always evolving but I like short term rentals right now. Doesn't work in every market but it definitely works in Arizona, especially Scottsdale.

      [email protected]480-818-7745
      0Reply
  • Alik Levin
    Property Manager · Scottsdale, AZ · Member since 2016 · 84 posts · 16 votes
    3d

    Scottsdale STRs had their moment, then oversaturation and a firm city stance. North Scottsdale plays a different game: snowbirds book 30-plus-day winter stays most HOAs allow, and high-end homes do best. Which side are your buyers on?

    0Reply
    • Mason WeissBusiness Member
      OP
      Realtor · Phoenix, AZ · Member since 2021 · 536 posts · 246 votes
      2d

      There is saturation but there also is saturation with Realtors, Mortgage Brokers, PM's, and everything else in real estate. The best always win and it is the same thing with Scottsdale short term rentals. I talked with an investor the other day grossing $600K annually on his vacation rental. Hard to find many other markets where that is possible. High demand, high reward, and yet also higher risk of failing.

      [email protected]480-818-7745
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    • Alik Levin
      Property Manager · Scottsdale, AZ · Member since 2016 · 84 posts · 16 votes
      2d

      The best win in every lane.

      1Reply
  • Amber Stout
    Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 383 posts · 153 votes
    3d

    Interesting perspective, @Mason Weiss ! I'm an investor and mortgage broker here in FL, and I've definitely seen how challenging it can be to make traditional buy and hold deals pencil out with today's rates, insurance, and property taxes.

    The tax advantages of STRs are getting more attention, especially from higher income investors. That said, I'm a big believer that the deal should still make sense beyond the tax benefits. I have seen some investors solely buy for the purpose of the tax incentive and from a cash flow perspective wasn't the best deal.

    Curious, are most of your buyers purchasing primarily for the tax strategy or are they finding properties with decent cash flow as well?

    0Reply
    • Mason WeissBusiness Member
      OP
      Realtor · Phoenix, AZ · Member since 2021 · 536 posts · 246 votes
      2d

      Tax strategy begins the conversation, usually their CPA tells them they need to explore the potential of acquiring an Airbnb because they can materially participate. Then we try and find a property that either already has strong financials from previously operating as a short term rental, or we look for a property with high projections. I like to not just rely on projections, but specific areas have strong case studies that I am able to walk my client through prior to purchasing a short term rental.

      [email protected]480-818-7745
      0Reply
  • Mason WeissBusiness Member
    OP
    Realtor · Phoenix, AZ · Member since 2021 · 536 posts · 246 votes
    2d

    Tax strategy begins the conversation, usually their CPA tells them they need to explore the potential of acquiring an Airbnb because they can materially participate. Then we try and find a property that either already has strong financials from previously operating as a short term rental, or we look for a property with high projections. I like to not just rely on projections, but specific areas have strong case studies that I am able to walk my client through prior to purchasing a short term rental.

    [email protected]480-818-7745
    0Reply
  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    2d

    How long have you pushed this strategy?

    It's not a new strategy, not like you discovered it. Just short-term positioning usually lacking any long-term thinking. The usual echo I state here; fast solutions have slow problems.

    0Reply
    • Mason WeissBusiness Member
      OP
      Realtor · Phoenix, AZ · Member since 2021 · 536 posts · 246 votes
      2d

      "Push" is a poor word choice and I do say CPAs are the ones recommending this to their clients. Different investments work for different investors at different income levels. I am always open to hearing what others are pursuing but it does sound like many agree with my sentiment. What markets and strategies have you executed in the last 24 months? Would love to hear!

      [email protected]480-818-7745
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    • V.G JasonPro Member
      Investor · Member since 2022 · 3k+ posts · 3k+ votes
      1d
      Quote from @Mason Weiss:

      "Push" is a poor word choice and I do say CPAs are the ones recommending this to their clients. Different investments work for different investors at different income levels. I am always open to hearing what others are pursuing but it does sound like many agree with my sentiment. What markets and strategies have you executed in the last 24 months? Would love to hear!

      CPAs follow the same issue I already presented-- their head is in the sand for general financial guidance outside of avoiding taxes. It's the tail wagging the dog.

      Only 3% of the American population right now can genuinely invest in real estate-- there's not that many different strategies. I am doing a lot of the same. But that wasn't my question, you said 15 of your clients did this. The next question is did they close this year specifically?

      They'll learn the headache shortly, and how are you intending to rationalize the problem that they underestimated-- managing the STR?

      0Reply
    • Mason WeissBusiness Member
      OP
      Realtor · Phoenix, AZ · Member since 2021 · 536 posts · 246 votes
      1d

      I help the 3%.

      [email protected]480-818-7745
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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 4k+ votes
    1d

    I think most people who purchased a property in the last 3-4 years lost money(50%+ of people).

    However, maybe the Phoenix market is different and people are performing well.

    Do you have statistics to show that Phoenix market is performing well for STR's?

    Is there more demand to stay in Phoenix?
    Is the ADR(Average Daily Rate) going up?

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    • V.G JasonPro Member
      Investor · Member since 2022 · 3k+ posts · 3k+ votes
      1d
      Quote from @Basit Siddiqi:

      I think most people who purchased a property in the last 3-4 years lost money(50%+ of people).

      However, maybe the Phoenix market is different and people are performing well.

      Do you have statistics to show that Phoenix market is performing well for STR's?

      Is there more demand to stay in Phoenix?
      Is the ADR(Average Daily Rate) going up?

      Higher than 50%. Try closer to 90%.

      The real estate market is in a N shape, and I am not sure where we are on the downslope.

      Phoenix market has been bad. Not as bad as Austin and I think Austin is a poster example for bad. My capital is still there since the regression is so deep, but am bid Phoenix just not strong enough clearly.

      But like all cities it's bifurcated; Maricopa & Buckeye down but nice areas like north Phoenix-- it's going decently. The AirBnB market is on par with others--down from 22 aggressively though Scottsdale can still get a decent penny but most of Phoenix has regressed.

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  • Melissa HaworthBusiness Member
    Real Estate Agent · The Panhandle | The Emerald Coast | Panama City Beach | Destin · Member since 2017 · 295 posts · 110 votes
    1d

    Seeing some of the same on the Emerald Coast. A lot of my investor calls this year started with "my CPA told me to look at an STR." The big difference here is condos. With the newer Florida condo safety and reserve rules, a lot of the older beachfront buildings have special assessments or big HOA increases coming, so buyers are leaning toward houses or newer buildings even when the numbers are a little tighter. I'd guess that keeps going into 2027. Are your Phoenix buyers mostly going single family?

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    1d

    We're seeing the same thing on our side, Mason. Now that 100% bonus depreciation is permanent for property acquired after January 19, 2025, there's no phase-down for buyers to race against. I'd expect STR demand from high earners to hold steady into 2027.

    One thing worth flagging for your investors is the excess business loss limit. Even once the STR qualifies and the loss is non-passive, the amount that can offset W-2 wages is capped. For 2026 the cap is about $256K single and $512K married filing jointly, and anything above it becomes a carryforward. A buyer expecting a $400K first-year loss on a bigger property may not get the full benefit in year one.

    The other piece is recapture. That six-figure deduction is a deferral, not a permanent write-off, and the short-life assets from the cost seg come back at regular rates on sale. The buyers who understand that going in and log their hours from day one are the ones who keep the deduction if the IRS ever asks.

    Happy to connect!

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