Deal killers for me are shared utilities with no clean way to split, big roof or foundation risk, rents already at the top of the comp set, and anything that needs heavy rehab while tenants are in place.

While we utilize trusted third-party contractors rather than an in-house crew, the process of managing those repairs requires a significant amount of administrative labor.

The IRS generally requires the property to be used as a business or investment property for depreciation purposes, so if it’s mixed-use, the depreciation and cost segregation would likely apply only to the part that is used for STR.Other points to consider:Partial-year rental: Depreciation, deductions, and cost segregation benefits are typically prorated based on the time the property is rented.Transitioning to full-time STR: Once the property is no longer your primary residence and is used entirely as a rental, you may have more opportunities for deductions, accelerated depreciation, and cost segregation benefits.Other advantages: STRs may allow for deductions on mortgage interest, property taxes, utilities, insurance, repairs, and improvements related to the rental period.

DC has very specific tenant protections, and missing language can cost you time and money later.That said, here are the non-negotiables I recommend focusing on:Lease structure essentialsClear utility responsibility (who pays what, how billed, and consequences for nonpayment)Occupancy limits and guest policy (especially important since you live on-site)Noise, shared space, and house rules spelled out clearlyMaintenance reporting procedures and timelinesRight of entry language that complies with DC notice requirementsNon-renewal and termination language (this is critical leverage in DC)No verbal modifications clause everything must be in writingBecause you live in the basement, make sure the lease clearly defines:What areas are private vs sharedParking, storage, laundry, and entry accessQuiet hours and expectations both waysScreening advice (this matters more than the lease)Most landlord problems come from screening mistakes, not lease wording.At minimum, screen for:Income stability, not just income levelRental history (this matters more than credit score)Eviction history specific to DCConsistency gaps in employment, unexplained moves, incomplete applications are red flagsPick one screening standard and apply it consistently to everyone.

My own opinion on STRs in San Diego is that the increased income is fully offset by the extra costs (utilities, furnishings, cleaning, higher maintenance/cap ex, etc) and effort (managing tenants, cleaners, handymen, OTAs, etc).  

The cost is not just housing when you add in the insurance, property taxes, utilities, groceries, etc it’s really tough.

No one's saying "I don't use internet" - it's a utility like electricity.

I hope the Administration takes this step, and utilizes it as the cornerstone of an “emergency declaration on housing.”

Depending on the structure and your participation, repairs and maintenance, property management, and professional fees, mortgage interest and points, utilities, insurance, and property taxes, travel, mileage, and home office (when applicable), depreciation, and potentially accelerated depreciation through cost segregation could play a role in your tax situation.If you want a lower-risk way to start, options like a live-in renovation, a small rental, or even upgrading and renting out your current primary (if you didn't already take out the HELOC) could work with better tax treatment and less pressure.Good luck and happy to connect!

While the change looked good on paper because heat related utilities were separated, prospective tenants immediately recognized that heating a two-bedroom unit with electric baseboard heat is expensive.