Vacation Rental Under Contract - Transfer VRBO, Sales tax, etc

[Keith Schulz]

Hello All,

I see a discussion from about 3 years ago on this topic, but VRBO keeps changing things and regulations keep changing, so I thought I'd start a new discussion.

I have a vacation rental property under contract in northern Wisconsin, closing May 28. I've got experience in long term rentals and flips, but the vacation rental thing is new to me (because what else do you do during a pandemic but start a new business). The current owner has several bookings lined up for the summer, but has canceled March and April and May due to our "Safer at Home" orders. All of his bookings are thru VRBO.com. VRBO tells us they can't transfer bookings from one owner to another. It sounds like books need to be canceled under the current owner and re-booked under the new owner. So what is the best way to seamlessly do this? 

I'm planning to start advertising thru social media to try to line up more renters for the coming months. I think people will be ready to go somewhere as soon as the stay at home orders are lifted. Should I just have the current owner block out the times that new renters would like to stay? Do I start a new VRBO listing now, or wait until it's officially closed? What other places should I advertise?

Can any vacation home owners enlighten me on how sales tax is done? I believe I need to get a permit to collect sales tax?

What are your thoughts on entity structure. The financing will be in my personal name (it was the cheapest easiest way). However I do have 3 entities currently setup. One is for my long term rentals, one is for my real estate brokerage, and one is for our sales as agents. I was thinking about lumping this one in with the long term rentals or just leaving it as a sole proprietorship until we get things rolling and figure out the best path. 

Thanks,
Keith

[Ken Boone]

So for me it was not a big deal.   First let me say this.  If he has good reviews on VRBO, VRBO will transfer the reviews to your listing but you need to contact them before you do anything to make sure the steps are followed.  Again, that is the reviews not the bookings.

The bookings thing is not a big deal to me.  As long as the current owner is willing to work with you it won't be a problem.  So the deal is that you need to get your listing set up.  Then have the current owner send you a list of all his future bookings - names and dates.  Then go in to your calendar and block those dates.

Then the current owner will need to contact each of his future bookings and let them know he is selling the property but working with the new owner.  This part is up to you, but I would let him know that he can tell all of his future bookings that once he cancels their booking, they can re-book with you immediately and you will honor their current pricing.  (When I purchased mine, they were priced under market value).  You will already have your listing set up so he will need to provide the guests with you listing and your contact info.  The guests will need to contact you when they are ready to book so you can unblock your calendar for their dates.  Once that is done they book.  Basically we gave all the previous owners guests a timeline to re-book.  It was a matter of days I think, that I would hold their dates blocked until they booked.

We carried over about 15 bookings or so when I did this and it wasn't bad.  We had immediate income which definitely helps when starting a new cabin.  We only had 2 that didn't book.  We do not allow pets so two of them decided not to book for that reason.

Hope that helps.