All Forum Posts by: Andrew Simms

Generally, I have found in dense areas where there are a lot of sales, it can be "close" but in more rural areas, not close... at all. But that's as general of an answer as the question. As everyone else said, pull your own comps. 

@John Underwood The equity line is definitely a good thought. I have one on our primary, but will likely be selling our primary to build (at the farm). It would suck to lose that cheap money for sure. We are doing a seller finance deal on the farm. Terms have not been completely ironed out. I am getting some info from our CPA is my assumptions on the taxes are correct. I could always sell it down the road if needed. 

@Travis Timmons I think you are absolutely correct on getting in at the right time. And I wouldn't even consider getting back in at the prices and interest rates now. There's definitely the FOMO, but I don't have a crystal ball. 

I appreciate the input from both of you and I am leaning towards trying to find ways to keep it, at the very least see how this year goes. 

I have a mountain cabin in WNC. I really enjoy running the STR, providing great value for our guests and ensuring they have an excellent time. There's something fulfilling in it. That said, it is a financial decision first and foremost. We have an opportunity to buy-out one of the partners in our family farm. Just assume there is not a return involved in that. Just a personal desire to do this (many reasons, likely none of which are important to the awesome folks on this forum). We could probably manage the payments without selling the cabin; however, it would provide significant cushion and allow us to pursue some other opportunities.

Financial Details:

Purchase price: $264k (February 2021)... probably put in $36k to be rent ready. Based on my records, we did $11,550 in depreciable improvements. Interest rate: 2.875%. Insurance $1200/yr. Taxes $1200/yr

Net Income: 

2022 = $6,274 (before depreciation); Gross $51k; 62% occupancy

2023 = $5,236 (before depreciation); Gross $45k; 57% occupancy

2024 has seen so far, a decline in bookings. But that was kind of expected given the time of year. Things usually pick up starting in April. We also opened up to dog friendly. 

We have had nothing but 5-star reviews on VRBO, and nearly all 5-stars on Airbnb. Our cleaner has indicated we are one of her busiest clients. 

Potential Sale price per our realtor: $469k-$489k. I had looked up comps before her CMA and can confirm this is reasonable. It is also in line with some properties that are currently for sale. Ours has some features that probably give us an edge.

I know I will owe taxes here and hopefully someone can shed some light on that. My numbers may not be spot on, but assuming:

Sale price of $469k (6% agent fees), basis of $264k, Total deprecation taken $24,600 (adjusted basis $239.4k). Amount subject to capital gains and depreciation recapture: $469k * 0.94 - 239.4k = $201,460.

I would owe depreciation recapture (25% rate x $24,600 =$6,150), capital gains (15% rate so $26,500), state tax (North Carolina 4.75% so $5,100). 

Are capital gains taxes progressive? For instance, is the first 94k (we are MFJ) at 0% and the next at 15% or is it all 15%. Our AGI is likely over $250k this year, so we would also have the 3.8% medicare surtax I believe. How is the surtax applied? 

I have probably rambled on enough. BP fam - what would you do? Not looking to 1031 because I can't with the family farm structured the way it is. Any questions - fire away! Thank you all in advance. 

Our experience is with STR, but I imagine I would do it similarly for LTR. Lockbox for the physical key in case of emergency/failure. In 2.5+ years, our smartlock (Kwikset 914) has never failed. But I do have a backup waiting in a box. I like the Kwikset due to the SmartKey technology so you can easily rekey.

The codes make it so much easier than keys. I have enough keys for everything at my primary residence. 

 We used Georgia Spa Company. My concern with a Costco hot tub is service. These things will break. I don't know who manufactures the Costco ones, but parts availability may be more of an issue. 

I would highly recommend Georgia Spa. They did a jam up job on installation. We have had to have them service it a few times, and while they may not have availability right away, they are dependable. We bought from our local store (Kennesaw GA) for our cabin 2.5 hours away in North Carolina. They won't sell outside their service area. Blue Ridge should be right in their wheelhouse. 

VRBO said I needed to allow 24hours for the guest to respond with the appropriate ID verification. They did not so I contacted VRBO, cancelled the booking, and they will waive the cancellation fee and the impact on our cancellation rate. Right now, it is counting towards our cancellation rate, but I will reach back out in a day or so to get that straightened out. 

Hi BP fam!

Got a booking last night from someone local (same area code) to us, just 1 guest listed, and only 2 nights (we only allow 2 night bookings during week days), which is very rare for us.

I googled the guest and found that they do not meet our minimum age requirement, which is 24. The guest is no older than 21.

They are new to the platform (VRBO) so I tried to initiate cancellation with VRBO support as this sounds like a party in the making. They are requiring proof of age (photo ID) so I’ve asked for it from the guest.

If they don’t respond, what would you do?

 I agree with most all of this, except getting a coach. I got free coaching through this forum from the likes of @Luke Carl @John Underwood @Michael Baum and a whole bunch of other helpful folks. 

I also agree with what a lot of folks are saying and spreading out your risk with multiple properties. The beach places sound appealing, that's where I love to vacation, but higher cost (purchase and operational)... maybe consider a mountain place too.

@Brandon Del Boccio We have a cabin in Western North Carolina. Things have slowed down for us considerably, but generally, we are cash flow positive (accounting for all maintenance and everything) in the $500-$1000 per month range. We have been front loading some bigger maintenance items, so it could probably be more if I deferred some of those things... but it's nice to not worry about having a problem when a guest is there.