Bonus depreciation isn’t tied to whether your property is a short-term rental (STR) or medium-term rental (MTR)—it’s tied to whether the property is used in a trade or business and if you can establish material participation.Here’s how it works for you:Bonus depreciation eligibility: Any residential rental (STR, MTR, or long-term rental) can use bonus depreciation on assets with a useful life of 20 years or less (appliances, flooring, HVAC, land improvements, etc.) once you do a cost segregation study.Tax treatment:• If your rental is passive, those bonus depreciation losses are usually trapped against passive income only.• If it’s an STR where you materially participate (100+ hours, average stay 7 days or less, etc.), those losses can offset W-2 or other active income.• For MTRs (30–90 day stays), they’re generally treated as regular residential rentals, so losses remain passive unless you qualify for Real Estate Professional Status (REPS).This post does not create a CPA-Client relationship.

Without REPS, those losses are usually trapped as passive.You invest in a Short-Term Rental (STR) and materially participate, making it non-passive even without REPS.Multifamily (2–4 units): Great for long-term cash flow and equity but offers limited W-2 tax relief unless REPS applies.Short-Term Rentals: Strongest W-2 offset opportunity if managed actively, though more operationally intensive.Commercial Real Estate: Larger depreciation and cost segregation benefits but still generally passive without REPS.Cost Segregation Studies: Can create large paper losses upfront, but those benefits are often suspended unless REPS or STR status unlocks them.A small multifamily is a great wealth-building vehicle and may help you shelter some rental income from taxes, but it won’t do much to reduce your W-2 burden unless you or your spouse can meet REPS requirements.

Two bedrooms may or may not be in high demand depending on the supply of 2-beds in Section 8 in your area.

Big mistakes or money traps to avoid?

We use a lot of IT in my other business, but I can't make a good case for fully integrated property management software until you get into 100+ units.Analysis paralysis is a very easy trap to fall into.

Lawsuits, liability exposure, and unexpected creditor claims can quickly derail even the most carefully laid plans.Many new investors fall into the trap of “analysis paralysis”, researching endlessly but never making a move.

The individuals named as “Tenant” in Section 1 of this Lease and any of their children named in such Section 1 are the only individuals who may occupy the Premises, and the Premises may be used only as a private residence for those individuals.

A good property manager can be your best first call since they know which areas attract stable tenants and can often introduce you to trusted agents and contractors.The biggest traps new investors run into are rushing into a deal without fully knowing the neighborhood, underestimating how much repairs will cost, and not checking the track record of the people they hire.

My cleaners aren't just mopping floors and emptying lint traps; they're my eyes on the ground every week or two.

One thing to prepare for is the inspection—before move-in, Section 8 sends an inspector to make sure the unit meets HUD’s housing quality standards.