Underwriting is the part of this business that actually determines outcomes, and it is the part most buyers do least. We screen roughly a thousand deals a week and eliminate about 98%, and almost all of that elimination happens in the analysis rather than at the viewing. This is where it stood in 2024, which was the year the market stabilised and the tax benefit shrank.
What 2024 changed
2024 was the stabilisation. The panic of 2023 faded, supply growth slowed in most markets, and occupancy found a floor. What changed most was the tax side: bonus depreciation at 60% meant the same property produced a materially smaller first-year deduction than it would have three years earlier.
Buyers who had waited for prices to collapse were still waiting. What actually happened was a market that stopped falling and started rewarding operators who had systems rather than luck.
Financing costs remained elevated relative to the 2021 window, and buyers had adjusted their expectations rather than waiting for a return to cheap money.
How it works
Underwriting is the part of this business that actually determines outcomes, and it is the part most buyers do least. We screen roughly a thousand deals a week and eliminate about 98%, and almost all of that elimination happens in the analysis rather than at the viewing.
- Assemble twelve to twenty genuinely competitive listings: same submarket, same bedroom count, same amenity tier, and pull twelve months of booked nights and rates.
- Model twelve individual monthly revenue figures rather than dividing an annual number by twelve, because seasonality is the whole shape of the risk.
- Build the complete expense stack: debt service at the actual rate, property tax reassessed at your purchase price, insurance quoted for the address, management all-in, cleaning per turnover, utilities at rental-use levels, dues, and reserves.
- Stress it: revenue at 75%, three lost peak weeks, insurance 40% higher, and for city properties the long-term rental floor.
What that meant in 2024 specifically
Buyers who had waited for prices to collapse were still waiting. What actually happened was a market that stopped falling and started rewarding operators who had systems rather than luck.
The live risk in 2024 was regulatory rather than economic. Several resort markets tightened permits, and the direction of travel in high-pressure housing markets was consistently toward restriction.
2024 was a year to buy on fundamentals rather than on the tax benefit, because the tax benefit alone no longer carried a marginal deal.
Where it goes wrong
The failure modes are consistent across years, which is itself useful information: they are not caused by the market cycle, so a different year does not protect you from them.
- Treating a seller's proforma as data. They are routinely built by extrapolating peak-season rates across twelve months.
- Building a comparable set on bedroom count and distance alone, so the subject property is compared against inventory it does not actually compete with.
- Omitting the maintenance and capital expenditure reserves, which is the most common reason a projected return exceeds the realised one.
What a buyer should have done in 2024
2024 was a year to buy on fundamentals rather than on the tax benefit, because the tax benefit alone no longer carried a marginal deal.
The underwriting discipline does not change with the year. Twelve individual monthly revenue figures from a comparable set you assembled, a complete expense stack including reserves, and a stress test at 75% of projection that still covers debt service.
We screen roughly a thousand deals a week and eliminate about 98% of them. That ratio has held across every year on this site, through the boom, the correction and the stabilisation, because it is a function of how listings are selected rather than of the market.
What generalises, and what does not
Reading a year in isolation is the most common analytical error in this business. 2024 had its own conditions, and someone who learned the wrong lesson from it carried that lesson into a market that no longer rewarded it.
What generalises is the mechanics above. The definitions, the tests, the sequence and the failure modes are the same in every year on this site, which is why they are worth learning properly once rather than relearning each cycle.
What does not generalise is the environment: the cost of capital, the depth of supply, the bonus depreciation percentage, and the regulatory posture of a given jurisdiction. Those change, sometimes abruptly, and a model that treats them as fixed is a model that was only ever right about one year.
The practical consequence is to build the analysis so the environment is an input rather than an assumption. A property that only works at one interest rate, one occupancy level and one tax treatment is not an investment thesis, it is a bet that nothing moves.
Keep reading
Frequently asked questions
What was different about analysing a short-term rental deal in 2024?
2024 was the stabilisation. The panic of 2023 faded, supply growth slowed in most markets, and occupancy found a floor. What changed most was the tax side: bonus depreciation at 60% meant the same property produced a materially smaller first-year deduction than it would have three years earlier.
What was the main risk in 2024?
The live risk in 2024 was regulatory rather than economic. Several resort markets tightened permits, and the direction of travel in high-pressure housing markets was consistently toward restriction.
What were financing conditions like in 2024?
Financing costs remained elevated relative to the 2021 window, and buyers had adjusted their expectations rather than waiting for a return to cheap money.