Why More Physicians Are Investing in Short-Term Rentals — And Why Traverse City Makes Sense

Real estate investing for doctors isn’t a new idea. But short-term rentals in particular have become one of the most talked-about wealth-building strategies in physician circles over the past few years — and for good reason. I own and operate a short-term rental here in Traverse City, and I work with physicians who are either exploring their first investment property or quietly building a small portfolio while still practicing. Here’s what I’d want you to know going in.

Why short-term rentals appeal to physicians specifically.

Physicians are high earners with limited time and significant tax liability. That combination makes real estate — and STRs in particular — an interesting tool. Unlike long-term rentals, short-term rentals with average stays of seven days or less are treated differently by the IRS. When you actively manage your property and meet the material participation requirements, the losses from depreciation can potentially offset your W-2 income directly — without needing full Real Estate Professional Status, which is nearly impossible to qualify for while practicing full time.

This is sometimes called the STR tax loophole, and it’s legitimate — but it’s also nuanced. The rules matter, documentation matters, and the specifics of your situation matter. I always tell people: talk to a CPA who works with physicians before you buy anything. The tax angle is real, but it shouldn’t be the only reason you invest. The property still has to make sense on its own terms.

What actually makes a good STR investment.

Location is everything. A short-term rental works when people genuinely want to be there — repeatedly, across seasons, year after year. That means you want a market with strong demand drivers that aren’t just summer. One beach weekend town can look great in July and go completely dark in January. The best STR markets have multiple reasons to visit across the whole calendar.

Beyond location, you’re looking at: the purchase price relative to projected nightly rates, local regulations (some markets have started restricting STRs significantly — always check before you buy), the cost to furnish and set up the property well, and how you’ll manage it — yourself, with a co-host, or through a property manager.

The properties that perform best are the ones that feel like an experience, not just a place to sleep. Guests have a lot of choices. The ones that book consistently — and command premium rates — have something distinctive about them. Good design, a great location, a thoughtful guest experience. It’s closer to hospitality than real estate, honestly.

Why Traverse City is worth paying attention to.

I’m obviously biased here — I live here and I operate a rental here. But the case for Traverse City as an STR market is straightforward. It draws visitors in every season: summer on Grand Traverse Bay, fall wine country and color on Old Mission and Leelanau Peninsulas, winter skiing at Crystal Mountain and Shanty Creek, spring hiking and cherry blossoms. That year-round demand is what separates a strong STR market from a seasonal gamble.

The Northern Michigan real estate market has appreciated steadily, and inventory remains limited — particularly for well-located properties. A property that cash flows well today is also likely to hold its value long term. For a physician looking for an investment that combines income, appreciation, and tax strategy in a place they’d actually want to spend time, it’s a compelling combination.

The semi-retired angle.

Something I hear more and more from physicians — especially those in their late 40s and 50s — is that they’re thinking about what comes next. Not necessarily stopping medicine, but scaling back. Working on their terms. Creating income that doesn’t depend entirely on showing up and seeing patients.

Real estate in general, and STRs in particular, can be part of that picture. A property that generates $40,000–$80,000 a year in gross revenue — even after management fees and expenses — starts to change the math on how many hours you need to work. It’s not a replacement for a medical career. But as one piece of a broader financial picture, it gives physicians options they wouldn’t otherwise have.

I came to real estate from medicine partly because I saw what financial flexibility could do for the physicians I knew — the ones who had built something outside of their practice had choices. The ones who hadn’t were stuck, even when they didn’t want to be.

Where to start.

If you’re a physician curious about STR investing — whether in Traverse City or somewhere else — start by getting honest about your goals. Is this about income, tax strategy, long-term appreciation, a place your family will use? All of the above? The answer shapes everything about what kind of property makes sense.

Then find a local agent who actually understands the STR market in the area you’re considering. Not someone who just sells residential real estate and adds STR as an afterthought — someone who knows the nightly rate data, understands the regulations, and can help you model a real projection before you make an offer.

If Northern Michigan is on your radar, I’m happy to talk through it. I know this market from both sides — as an investor and as an agent — and I’ll give you a straight answer either way.

Note: STR tax content in this post is general in nature. Please consult a qualified CPA or tax professional for advice specific to your situation.