Bought the property in July with one unit needing a new tenant- The open unit was dirty after cleaners had been through ($350).

Here’s the 30,000-ft view:What cost seg actually doesA study breaks the property into buckets — 5-, 7-, 15-year stuff (carpet, cabinets, certain exterior, land improvements) vs the 27.5-year building.

Our clients making mid-six figures via W2 get the most significant benefits by launching an STR by the end of the year and offsetting taxes.The most common hurdle is the material participation test, often achieved by committing over 100 hours of direct management and tracking that time to ensure it is more than the hours spent by any other individual, including cleaners and property managers.

The IRS specifically said that inclusion of carpets and appliances in a 1031 exchange is case by case.

Really appreciate you breaking this down so transparently, this is one of the cleaner explanations I’ve seen on how tight hospitality financing is reshaping landlord-operator structures.What stood out most is how you treated this like a risk-capital allocation problem rather than a traditional TI negotiation.

The demand is usually steady year-round in Chicago for that group.That said, here’s how I’d weigh it:If you go MTR:You’ll need to furnish it properly — not fancy, but turnkey: queen bed in each room, blackout curtains, comfy couch, smart TV, solid Wi-Fi, a stocked kitchen (pots/pans, utensils, coffee maker, toaster), and a simple desk setup.Expect about $4K–$6K upfront to get it guest-ready if you’re starting from scratch.Cleaning and turnover management can be automated (Turno app or a local cleaner), but there’s still some coordination involved.Since you’re near a hospital, list on both Furnished Finder and Airbnb (30+ night stays) — that combo usually keeps you booked.If you go LTR instead:You’ll save yourself the time and mental load of setting up a new system while adjusting to newborn life.Even if the rent’s lower, you’ll get steady income and less stress, which might be worth it right now.Winter leasing in Chicago:Yeah, it’s slower — especially December through February — but MTRs tied to hospitals stay active because medical contracts don’t follow the same seasonality.If this were me?

Don’t forget the $10k damages clauseThis honestly saves you here.If they continue smoking and you later decide not to renew, you are contractually covered for the cost of remediation, and odor removal is expensive:Ozone treatmentsKilz sealing every wall/ceilingRepaintingCleaning ductsReplacing blinds, fixtures, sometimes carpet/flooringTen grand goes fast.Bring this up gently, not as a threat, but as a real cost they will be responsible for if the smoking continues.6.

As for the leases, waiting until January 1st can make bookkeeping and tax reporting cleaner since you’re starting fresh for the new year, but transitioning now is fine too, you need to track the date carefully for tax purposes.The mortgages are still personally held unless already in the LLC’s name.

That structure helps reduce self-employment taxes on flips.For rentals and future multifamily, an LLC does make sense for liability protection, cleaner bookkeeping, and long-term tax planning, but you can set that up when you get closer to holding properties rather than flipping.As for timing, there’s no tax disadvantage to buying now versus January.

If your goal is cash flow now, wholetail/flip and redeploy into a cleaner 1%+ rent-to-price deal.