Venturing into very first SFH for a likely STR in the Berkshires

[John Fierke]

Hello all new and established BPs. A conversation in January with a coworker (and BP fan) opened our eyes and here we are - we just closed on a cash-out refi of our primary residence (in Missouri) today @ 2.875% and we're going to use that as seed money for somewhat of a cottage (2B/1b SFH) built in the 1940s in southwestern MA. We're currently under contract and waiting for the inspection report. The plan so far is for us to set it up as a Short Term Rental to both grow equity and cash flow. Our next investment will be less shiny and hopefully more lucrative - this is just what we're comfortable doing right now.

We're really pleased so far with the team we've put together, all seem to check the real estate investment checkbox - CPA, Financial Advisor, Realtor, Lender, Lawyer.

Anyway, I have a few topics that I look forward to hearing input on:

1. LLC: Everything is pointing us to set up an LLC but can somebody help me understand in what state do we set it up - Missouri or Massachusetts? Our lender has provided us with both 25% and 20% down options for LLCs - each with its pros and cons.

2. Property management: The figures I've been seeing ranged from 8% to 12%. So far what we've found is MUCH more than anticipated (20%+) but they appear to be FULL SERVICE and we are nowhere near the property. We realize the number and frequency of property management services reduces from STR to MTR to LTR but currently we think our best bet is with short term.

3. Repairs vs Repairs & Improvements: We see this place as eventually being 3B/2b but we probably need to hold off, considering our initial outlay (down payment, repairs, furnishing, etc.) as well as current rates for construction.  Our realtor said we could either turn it around and start renting it out right away to get cash flowing or we could keep it off the market for a few months and have a really great property that could probably command a much higher nightly rate and improved occupancy (as well as overall improved value).

OK, welcome me to the fold with your best suggestions.

Thanks a ton,

John