All Forum Posts by: Chase Cline

@Luke Carl yep they are condos so we have HOA and pretty high property taxes. How do you not have property tax?

@Luke Carl in that case this property absolutely meets and exceeds that criteria. Grossed $29k this year on a $135k property. so we are 1.7%+. AND we are closing on another one in the same complex in two weeks that we are buying for $109k so assuming it rents the same we are talking about 2.2% PP for that one. So since these meet the criteria what am I missing?

Seems like mine should be in the 'disgusting amount of money' criteria but something is missing. 

@Luke Carl yea I manage it myself as well using AirBnb and VRBO. 

What does 'PP' stand for when you say need VRs to gross 1.5% of PP per month?

I've been casually managing this property but as I am now planning on leaving my day job I want to figure out the cash/cost of these down to the dime before I make any rash decisions. We bought another one because we are paying $25k less for it than our first one so its a steal. At the very least we can sell it and make ~125% cash return. 

@John Underwood yea great point on depreciation. It turns out we discovered the depreciation was only being 50% counted as that's how it was the first year because we lived there half the time. That's what you get going with national chain accountants who don't really have a clue who you are and what you're doing. I wonder how much that update alone will impact everything. 

@Michael Greenberg thanks for the input. All the benefits you mentioned are what I want ha. The issue with a lot of the write-offs is we actually live on the same island just a few miles down the road as our property so there isn't really any mileage or anything significant to write off. 

@Tim Schroeder well this a condo with an HOA so the huge cap-ex issues like a roof won't happen. A refrigerator wouldn't cost more than a few hundred for the standard white ones so that's not much of an issue either. The only thing that could happen would be the A/C (and we will actually be replacing it soon) and that's $1,800. So really with ~$4k-ish profit when not making extra mortgage payments we are covered for any emergencies.

Can you elaborate on a 'disgusting amount of money?' Are those LTR or STR? Considering we put about $10k-$12k all-in for the down payment and fixing it up ourselves and haven't spent a dime since, I'd say we are still in a good place. but you are correct about finding a better money maker which is why I posted in the first place. I want to know how people solve that issue and what better options could be.

@Jeff Moore good point. I also live here at the beach so want it to make money. But since I live so close there isn't much I can write off other than supplies for the actual property or repairs, etc. This was purchased for $135k with around $10k-$12k out of pocket including a remodel we did ourselves. I was a huge newbie when I bought it 4 years ago but we've actually used it ourselves quite a lot too. It did $29k in rental revenue this year which is huge for a property that cost $135k. 

Hey Everyone!

Sorry for the clickbait title... 

I own a successful vacation rental (successful meaning it pays for itself) and close on another one at the end of this month. We also bought another one in August of this year that we will be moving out of in March and it will become our 3rd vacation rental.

So I use QuickBooks self-employed to track my first rental and I have a bank account dedicated only to that property. At the end of this year I saw a $1,000 profit which means the property was "successful" in that it fully pays for itself, which is the goal while there is still a mortgage on the property, right?

(by the way we paid $4,000 in extra mortgage payments throughout the year so we could have had $5k profit, but my point still exists)

Well, I met with my new accountant for the first time two days ago and a bomb was dropped on me that I hadn't thought about it. I was expecting to be taxed ONLY on the ~$1,000 profit I showed, but apparently that's not how it works (I'm not a newbie, but this was a newbie mistake that I only became aware of because I finally started using a real accountant and not H&R block). I am taxed on the Net Income which does NOT include any mortgage principal payments. So this took my taxable income on the property from what I thought was ~$1,000 up closer to $8k. Getting taxed on that amount will just about eat up most of the profit. 

Are all of you dealing with the same issue? This was a very shocking realization and is making me re-think having a mortgage on vacation rentals. How are all of you handling this?

What are your monetary profit goals on VRs that still have a mortgage?? Even without making extra mortgage payments this year we will be left with maybe $1k profit after taxes. Is the work of managing these places worth a $1k profit every year?  

Thanks for any feedback!

Chase

It's only tough to get financing if you go through the big banks. I've used a local credit union for two beach condo purchases and it was super simple. Plus, local credit unions aren't fannie mae/freddie mac related so you don't have to worry about any govt related issues. No PMI if you put down less than 20% either.

 32k is very realistic for a 2/2. I own a 1/1 beach condo and did 24k last year which included giving my condo away for 3 months to a Hurricane Harvey victim from Sept - Nov. On track to do 28k this year. We just closed on a 2/2 and expect to do closer to 40k/year  with it. 

@Tina Chen @Karl Haase you don't need any outside software for this. AirBnb tells you exactly how to do it in their help articles. I actually just synced mine and it took a total of about 10 seconds.  Here you go:

If you list your space on other websites, you can prevent multiple guests from booking the same dates by syncing your Airbnb calendar with your other calendars.

Calendar importing

Calendar importing allows you to automatically keep your Airbnb calendar up to date with an external calendar that supports the iCalendar format, including Google calendar or the calendar on HomeAway or VRBO.

To import a calendar:

1. On airbnb.com go to Host and select Calendar
2. Click Availability settings in your calendar view
3. Under Sync calendars, select Import Calendar
4. Copy the URL for your other calendar into the Calendar address (URL) field
5. Name your calendar
6. Click Import calendar

If you edit an external calendar that syncs with your calendar on Airbnb, it will take a few hours for those changes to be visible to guests viewing your listing.

Calendar exporting

Calendar exporting lets you view your Airbnb calendar on an external calendar that supports the iCal format. To export your calendar in iCal format and add it to your external calendar:

1. On airbnb.com go to Host and select Calendar
2. Click Availability settings in your calendar view
3. Under Sync calendars, select Export Calendar
4. Copy and paste the Airbnb calendar link into your iCal applications

@Ali Boone that's a great idea. Love the article! I will have to look into that as well

@George Pauley lol yes the pucker factor is always a great metric! I think I will take this method for now and once I get a team maybe I will have them do all the bank accounts, forming, etc.

@Derek Janssen didn't think about it that way, great point. Definitely something to think about.

@Michael Plaks I have never heard of a Series LLC before, I will definitely have to do some research on that. Thanks for the response!

@Tom R. I see your point, but it would suck to really start making some headway and then one "accident" cause you to lose everything simply because you didn't take the time and spend $200 to incorporate