The avoidance of taxes is the only intellectual pursuit that still carries any reward.” —John Maynard Keynes
to partner with a statewide short- term rental management company. This company manages properties in the markets where our clients are looking and can validate, in real time, what they’re experiencing with the properties they manage as well as the current regulatory environment. In general, you want a property on water, near other draws like a downtown area, hospital, business center, trails, nature areas, beaches, and all-season sports and festivals. Larger properties also do better because extended families can stay together. Pools, hot tubs, and gaming areas also add to property demand and occupancy. When we are considering a property, our short-term rental property manager can tell us if they like the property, if the market is saturated with other STRs, the average daily rate, the average occupancy rate, average monthly and yearly revenue, how to add value and revenue, and insight into the regulatory environment, if any.
These tax breaks are important to anyone with a job or business, especially high-income earners.
BEST USE OF A PROPERTY It is hard to beat the returns short-term rentals provide in a healthy short-term rental market. A student rental or group home might come close, depending on the area. In Ann Arbor, Michigan, for example, some investment properties use both student and short-term rentals to achieve cash flow in what is traditionally a tough market to achieve cash flow with a long-term rental. It is important to note that not all short-term rentals are profitable. You must have the right team to identify a profitable location and property, avoid regulatory issues and stay compliant, and use a property manager that maximizes revenue, occupancy, and property value. FIND WINNERS Tools like AirDNA can help you analyze a property and market, but we like
for short-term rentals near the coasts and on many of the inland lakes, and in college towns and city centers. Short-term rentals provide more cash flow than long-term rentals, and they offer something else that long-term rentals can’t: a reduction in W-2 or active income taxes.
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