STR Acquisition Due Diligence Checklist: 12 Items Before You Bid

STR acquisition due diligence is more involved than typical residential or commercial DD because the property must pass standard real-estate verification AND be operationally viable as an STR. Items that don't matter for primary-residence purchases (HOA STR rules, septic capacity for occupancy, post-storm insurance availability) become deal-killers for STR. This 12-item checklist covers the diligence work that separates well-prepared acquisitions from regret purchases.

Regulatory verification (do this first)

• City/county STR permit availability (verify directly with the agency, not just the seller's assertion).
• If permits are capped or grandfathered: confirm the specific permit transfers with the property.
• HOA / condo association STR rules — read the covenants, not just the marketing materials.
• Recent ordinance proposals — check city council meeting agendas for pending STR rule changes.
• Local enforcement track record — has the city been issuing fines? At what intensity?

Financial verification

• Seller-provided 12-month income should match Airbnb / Vrbo platform statements (not just spreadsheets).
• Request 1099-Ks from prior tax filings if available.
• Run AirDNA Rentalizer projection independently and compare to seller-provided numbers.
• Verify operating expenses through contracts (cleaning, PM, HOA, utilities, insurance).
• Identify capex deferred (older roof, aging HVAC) that will require investment within first 1-3 years.

Property condition

• Standard property inspection (structure, systems, roof).
• Septic + well inspection for rural properties.
• Coastal flood / hurricane code compliance verification for FL/Gulf/Carolinas/NJ.
• Title 5 septic for Massachusetts properties.
• Smoke / CO / fire compliance for STR-permit eligibility.
• Internet quality (often binding constraint for STR demand).

Cost-segregation in this strategy

Due diligence determines whether the acquisition is viable; cost-segregation determines how tax-efficient it'll be once acquired. Verify cost-seg potential during DD by reviewing: building age and recent improvements (newer = stronger 5-year/15-year ratios), outdoor amenities (pools, hot tubs, decks = 15-year property), furnishings inclusion (5-year property if FF&E transfers). A property with strong cost-seg potential can justify a slightly higher purchase price than a comparable property without it. See cost-seg property selection.

Frequently asked questions