Tips For Launching First Airbnb Property & How to Get Property Into LLC

[Charlie Krzysiak]

Hi all!

Background:

I currently am a junior in college who is taking an internship opportunity this upcoming spring with an accounting firm in Dallas. I am currently living in a house in my college town my parents own (My older brother went to the same school, but is now graduated). They pulled the trigger on getting a house because they found themselves constantly paying for costly hotels when visiting and having to pay both of our rent. With the property being vacant almost the entirety of spring and summer 2025 due to my internship, I thought it would be a great opportunity to get experience with Airbnb.

I pitched my parents the idea of having it listed on Airbnb for next spring/summer so we can see what post graduation could look like when it is completely vacant. I pitched the idea of me running the operational day to day to get experience, while they pay the mortgage. We decided on a % and they are stoked because they wanted in the long run this property to be a gameday house for football games etc. I think having the flexibility to choose what weekends my family or friends wants to come into town out weights the consideration of putting a tenant in there full time.

I have researched a bunch of things that come into consideration before starting this and I would love thoughts!

Questions:

- What are the steps to getting a property into an LLC? Will the lender want to change loan terms/rates? Is this allowed until the terms?

- What can I expect with taxes/registering with city/state?

I assume I need to register my property as a short term rental in Texas as well as my city? I have found the proceeds will be taxed at 6% by Texas and 7% by the current city I live in based upon Hotel Occupancy Tax. Upon top of that, federal income tax.

- What new type of insurance will I need?

I assume I will need to get new insurance that will cover and have a clause about short term rental capability? Also I saw online something about umbrella insurance? Are these the same thing?

Hope everyone is doing well and I thank you if you took the time to read this!

[Michael Baum]

Hey @Charlie Krzysiak, it isn't hard to get everything setup in an LLC. You will need an attorney. It will most likely trigger the due on sale clause in a standard 2nd home mortgage so read the fine print.

You can always use a commercial loan instead. It will require more down and is usually saddled with a higher interest rate. Frankly and LLC isn't necessary with only one or 2 STRs. Good insurance is a must.

That brings us to the insurance question. You will need a short term rental policy. Not a homeowners or a landlord policy. It is specific for STRs. Proper, Foremost and CBIZ are 3 that write them. You can also check with just about every other insurer out there as a lot now offer STR insurance.

An umbrella policy isn't a stand alone thing. It covers everything above and beyond (up to the limit) on you, your properties etc. It isn't that expensive and can be a good thing in case of a negligence lawsuit.

5m is a good amount.