It is not uncommon at all to have insurance companies tailor their coverage to the location, especially when it comes to water, flooding, and beach/front (or even Island generally) coverage and insurance. 

@Spencer Wann Great question and it’s wise to think through the tax implications now if you're planning to 1031 exchange a short-term rental (STR) that had a cost segregation study.

"Or would you still recommend leaning on using liability coverage?"

So as an alternative, I'm considering pivoting to a short-term rental, but I'm also realistic that I don't have the time to manage an STR, nor do I know enough to determine if net of management fees and other fees and utilities, whether it's actually a viable strategy, even if I wanted to hire it out. 

@Gabriel Williams, I also invest in Racine, we buy and hold primarily multi-family long term rentals. 

Your rental dwelling policy will cover if you have water damage coverage.

If you pay 1 caregiver $16.00 an hour, that's $11K per month to get 24x7 coverage for just 1 caregiver.  

That means understanding metrics like Debt Service Coverage Ratio (DSCR), loan to cost (LTC), and stabilized net operating income (NOI).

This setup can still offer several advantages without violating your loan terms.How It Works:The LLC manages the short-term rental activity—booking guests, collecting rent, and paying expenses—while you retain personal ownership of the home.The LLC doesn't change who owns the property but creates a clear separation of business and personal activities, which helps for liability and taxes.Tax Implications:Income still flows through to your personal tax return, but now you can deduct all ordinary and necessary business expenses (cleaning, maintenance, software fees, insurance, etc.) more clearly.If you materially participate (e.g., meet the 100-hour rule and no one else spends more time than you), you may qualify for the STR loophole, which means:Losses from the property, including depreciation, can offset your W-2 or active income, not just passive.You may be eligible to accelerate depreciation with a cost segregation study and take bonus depreciation—which is a major tax shield in the year the property is placed in service.Additional Tips:Use a separate business bank account under the LLC.Track all property-related expenses carefully—these can include mortgage interest, utilities, supplies, property taxes, and repairs.Make sure to classify the STR activity correctly on your tax return (typically on Schedule C if you're materially participating).Consider filing an election to be treated as an S-Corp for your LLC if your Airbnb becomes highly profitable—it could reduce self-employment taxes on your earnings.This post does not create a CPA-Client relationship.

We're curious what recommendations the BP community would make with regard to this topic including specific terms like loan length, down payments, and interest rates or if we should avoid doing this altogether.