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    Try “cap rate”, “seasoning”, “LTV” or “Airbnb income”.

    Strategies and taxes

    BRRRR, 1031 exchanges, depreciation, cost segregation and the short-term rental tax rules, explained plainly.

    How you hold a rental, and how you report it, can matter as much as the price you pay. The strategies here change how fast your money comes back to you; the tax rules change how much of it you keep.

    These pages are general education, dated as of 2026. Tax law changes and every situation is different, so take the questions they raise to a CPA who works with rental investors.

    Strategies

    1. The BRRRR method

      BRRRR recycles the same cash through one rental after another. The refinance decides whether it works, so here is each step, the rules that govern it, and a deal worked to the dollar.

      Intermediate12 min read
    2. 1031 exchange rules

      A 1031 exchange defers the tax on a rental's sale if you reinvest in more real estate. The deadlines are unforgiving and the boot rules catch people, so here is how each piece works.

      Intermediate11 min read

    Taxes

    1. Rental property depreciation

      Depreciation lets you deduct the cost of a rental building over 27.5 years, even while the property gains value. Here is how to work it out, what it does to your taxes now, and what it costs you when you sell.

      Intermediate10 min read
    2. Cost segregation for rental property

      A cost segregation study moves part of a rental's cost from 27.5 or 39 years into 5, 7 and 15 year classes, and with 100% bonus depreciation back, into year one. Here is what it finds, what it is worth and when it is not.

      Advanced10 min read
    3. The short-term rental tax loophole

      A short-term rental with short stays is not a rental activity under the passive loss rules. Run it yourself and its losses can offset your salary. Here are the exact tests, the paperwork and the traps.

      Advanced11 min read

    Key terms

    RTL
    Residential transition loan. The capital markets name for short-term investor loans on homes: fix-and-flip, bridge and ground-up construction, usually 12 to 36 months, interest-only, repaid by a sale or a refinance. Loan buyers and rating agencies say RTL; borrowers mostly say hard money or bridge.
    Hard money vs RTL: is there a difference?
    Mostly vocabulary. Hard money is the older street term for local, asset-based, expensive lenders; RTL is what the capital markets call the same short-term, interest-only investor loans now that national platforms make them to a standard and sell them. Hard money can also mean land or commercial loans, which are not RTLs.
    LTC
    Loan-to-cost. The loan divided by the project's total cost: the purchase price plus the renovation budget. Bridge lenders size on LTC and also cap the loan against the after-repair value; the lower of the two wins.
    Cap rate
    NOI divided by price: the return if the property were bought with all cash. A higher cap rate means more income per dollar, and usually more risk. Used to compare deals and to value income property.
    BRRRR
    Buy, rehab, rent, refinance, repeat: buy a property that needs work, fix it, rent it, then refinance at the new value to pull most of the cash back out for the next one. Usually a bridge loan followed by a DSCR loan.
    Hard money
    Short-term loans made mainly on the property's value, the hard asset, rather than the borrower's income, at higher rates and points, and fast to close. The street term for local asset-based lenders.
    Private money
    Loans funded by individuals or private funds rather than a bank, usually short-term and secured by the property, on negotiated terms. Anything from a friend lending on a flip to a private credit fund. Mostly business purpose, so consumer mortgage rules rarely apply.
    Private vs non-QM lender
    A non-QM lender is a licensed mortgage lender making loans outside the qualified mortgage rules (bank statements, DSCR, interest-only) to published guidelines, and selling them to investors. A private lender lends private capital, mostly short-term and asset-based. Both can offer DSCR; a consumer non-QM loan must still pass ability-to-repay.
    Bridge loan
    Short-term financing to buy or hold a property until long-term financing or a sale is in place: close fast, carry a property while it is fixed or leased up, then refinance or sell. Interest-only, 6 to 24 months, priced higher.
    Fix and flip
    Buy, renovate and sell within months. The lender funds most of the purchase and usually most or all of the renovation in draws, caps the loan against the after-repair value, and looks hard at the investor's experience and the budget.

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