Hi @Susanne Stauffer,iIn general, capital gains exclusion under Section 121 ($250K single / $500K married) can still apply to the original primary residence, even if the lot is later subdivided, as long as you meet the ownership and use tests.

Upscale MTRs can earn more, but demand is less predictable, so stress-test your numbers with conservative rates and occupancy.

Fire ratings, STC ratings, sprinkler systems, air barrier testing, and costlier mechanical systems—much of it driven by regulatory changes—are all at all-time highs.

The big pieces are: (1) you must place the property in service before 12/31 that means livable, furnished, photographed, and actually listed; (2) you need to meet one of the STR material-participation tests, which usually means putting in 100+ hours yourself and doing more than anyone else; and (3) the cost seg firm needs enough time to run the study and deliver the report so your CPA can book the depreciation.

Has anyone tested this model?

I’m planning to test a small batch (~$200 for 5–10 leads) but want real-world feedback first.

Will have them do a test dig to see if clay is there. 

Before closing, stress-test your numbers with a 10–15% rehab overrun and a longer hold; if it still works, you’re funded right.

If HELOC terms are weak, a small second or DSCR second can work, but stress‑test so your combined payments are covered by current rents with cushion for vacancies and CapEx.

The catch with 1031 properties converted to primaryThere’s a special rule (Section 121(d)(10)) that says:You must own the property at least 5 years total before using the exclusion.So the usual 2 years occupancy still applies, but the 5-year ownership clock matters if it came from a 1031.Example:Rent it out 2 years (investment use).Move in for 2+ years.Now you’ve hit both tests (5-year ownership + 2-year residency).