All Forum Posts by: Dom Radcliffe

Quote from @Wilfredo Torres:

Hi all, 

Closing on my 1st STR this week. Minor cosmetic rehab. In the meantime I'm looking for resources or anyone who has directly navigated the registration and licensing process that comes with running a legal STR in Orlando.

 Send me a DM, I will walk you through it.

I am looking for a reliable cleaning crew/person who is a tad handy with minor odd handyman kind of jobs in the Orlando Kissimmee area for a STR property. If you have recommendations for such, please share them here or DM me. Thanks in advance!

I do not believe them. I agree with you.

If it were that easy, they would not have been wasting their time on IG selling their “brilliant ideas/software” for pennies. It is just a pyramid ‘ponzi’ scheme!

Quote from @Steven Barr:

With home prices still very high and interest rates now high too, is anyone actually cashflowing on newly acquired property? Even the 1% rule doesn’t seem to work anymore 

Example: assuming 20% down

Purchase price: 250k

Rent: 2500/mo

Expenses: 1375/mo (45% expenses)

Debt service: 1350/mo (200k at 7% fixed 30 am)

Cashflow: -$225

In your example above,
- Expenses of $1375 per month does not make sense. Are you buying expensive gifts for your tenants every month? 
- Even when we keep your calculations as it is, 5% rent increase every year will turn your cashflow positive beginning year 3. Imagine what it will do to your cashflow 10 years down the road. Also add equity buildup via debt payment (by tenants) and appreciation of property price.

Calculate added revenue against pool expenses (maintenance, heating, etc) and if the number is positive, you have your answer.

Personally, if I were to book and have a choice between a place with a pool with $20-$30 more nightly rate than others without a pool (keeping everything else same), I would probably go for the pool option.

About bringing more attention --> Definitely!

Quote from @Jon Abbott:

Thanks, Adam. That really helps. Your answer is VERY helpful to understand bonus depreciation. Admittedly, I am a novice in my understanding of these terms. What what I understand, since I don't qualify as a real estate professional (I could qualify based on my hours, but can't due to my W-2 job), it's important for me to have STR status in order for the bonus depreciation to count against my W-2 income--that's the huge motivation for me at the moment. I am SO thankful for podcast 689. As I race against the clock for 2022 taxes, it sounds like the easier task will be to have the property listed by Dec 31. The more difficult task will be to secure two stays so that I can include all of the bonus depreciation against my W-2. Thanks again for sharing your knowledge.

 For the two stays - ask your friends/extended family to book your stay using your abnb/vrbo link. Again, if you are determined to use bonus depreciation against W2 income, work very closely with a tax professional to plan your strategy and execute it. If you do not have a fool-proof strategy in place, you might incur more losses going this route. Here's a really good BP post from @Michael Plaks

https://www.biggerpockets.com/...

@Jon Abbott - I am not a CPA/accountant, so I will answer from what I have learnt from my research. 

If purchasing STR for offsetting your active W-2 income, you need the following things to happen

- Property needs to be "in service" (for example - listed on VRBO/ABNB/Boking.com etc)

- If you are using cost segregation for bonus depreciation, it can be done anytime before April of '23 prior to filing taxes

- You need to show "material participation" - There are 7 specific tests you need to pass only one out of those seven. For a very superficial understanding, check this link. But know that there are many nuances to this and IRS website is the best resource. https://www.investopedia.com/t...

- Would you need to put in 100 hours prior to the end of the year, or a prorated number of hours could qualify? That is a question for a competent CPA/accountant/EA. May be some professional can chime in.

- If your goal is to not offset active W2 income for 2022 and just to show paper loss to offset the income generated from your STR or to offset W2 income from 2023, then I would suggest doing the cost seg study next year when you are fully in service and can also prove material participation. Granted that you would only be able to take 80% bonus depreciation next year, it is still better than nothing.

In my limited experience, I have learned that the right question for your tax expert is not "Can this be done?". It is "How can this be done?"

Hope this helps!

Quote from @James NA:

I learned and evolved in a different real estate universe.
The rules we were taught and lived by… were the SAME rules that ALL of the REIAs  and ALL of the Mentors espoused.

1) DONT BUY A PROPERTY THAT HAS LESS THAN 25% equity.

Now….. no one is saying that ?…  but then they aren’t whole sale deals… they’re RETAIL. SO WHY BUY FROM A WHOLE SALER?

2) DONT use future potential appreciation as a basis for appreciation… unless you ALSO factor in future potential DEpreciation.

3) You're not buying a rental property, you ARE buying a Cash Flowing Business …. And if the business doesn’t CASH FLOW.. you bought a pig with lip stick.

4) NEVER take YOUR cash out of YOUR pocket unless you KNOW that you’re going to get it all back in under three years. …as in the ONLY time you put out $20,000 to buy and fix up is if you KNOW, that you can sell or refinance ( with a cash out return) 

5) in the military when referring to their weapons and their battle plans they say… “ two equals one and one equals none” this means that is the don’t have TWO WAYS to protect themselves then they aren’t really prepared to do battle. TWO EXIT STRATEGIES… proven strategies… or you’re not a professional investor… you’re just gambling with your family’s money.

Almost ALL of the “ deals” I have been pitched in my region of Florida are built to assure that the wholesale gets rich… period. 

There’s a property listed on this website right now in Florida …3 br/2bath. $250,000 , $1500/ month rent… “vacant at closing”

Please ..would SOMEONE show us the math …… how …in…the…WORLD….. Is this an “ investment”…? It’s not even a RETAIL DEAL.

The sooner we start all calling out the bad deals… the sooner the sellers will get back in line… or go away .

If I get ejected from this site…..  whatever…. If this is what this site calls a “ deal”…. I won’t be missing out on anything.

$250,000 with expected rent of $1500 per month would be cash flow negative unless bought 100% with cash. Even then, ROI would not make sense.

I don't care if peddlers peddle appreciation/tax benefits/blah blah.

If inflation is at 8% yoy, then appreciation of 3-4% in real estate yoy on average reduces your wealth.

Thank you for this post. We need to start being vocal about how these deals are being peddled here and elsewhere (advertisers on BP) luring people into making bad decisions. As always, they will say "Everyone has to do due diligence and is responsible for their decisions." However, posts like these are also necessary so that people can see other side of the coin and make an informed decision.

Thank you folks for chipping in. This helps a lot. 

@Michael Baum - I checked them out online and they look like a good deal. Since they are microfiber, any of your guests complained about “being too warm?”

@Paul Sandhu - You are a savior brother! 

For our STR operators/managers out there, what duvet/comforter are you using in your rentals? Do you also use a duvet cover. If you only clean duvet covers, what about sweat smell left behind on duvets itself?

Hit me up with ideas and what has worked best for you. I am not asking for mountain STRs. This is for beach/FL.