All Forum Posts by: Dom Radcliffe

@Ned Carey - Thanks very much for clarifying this, Ned. I appreciate it.

Here's my situation;

I acquired a property and I am making repairs to it to bring it up to a certain standard before I list it on STR websites. It seems like the repairs will take some time so I won't be able to list it until at the end of December or in January '23. Can I deduct those expenses when I file for 2023 taxes (after listing the property in service) even when the expenses were incurred in 2022?

30% COC IMO is not the "gold standard" of STRs. It is a blip in the timeline radar of STRs. Anyone selling the idea of 30% COC to be achievable by a first time newbie investor starting from first year should look in the mirror long and hard, because this might only happen rarely.

Yes!

COC is temporary and does not take the whole picture into account. There are other factors in this multidimensional investment category - Equity and Appreciation. Also, there's depreciation. There are so many advantages when you factor it all in. If your day to day living expenses depend on COC of greater than 20-25%, then sure - do not buy low COC properties. If you are thinking like an investor, have cash reserves or other job to cushion back to, definitely consider lower COC (I feel comfortable with 10-15%) if the market is growing. Few years down the road, your monthly payments (mainly mortgage and interest) will be the same, while your COC will be higher because rental prices will have increased.

Hello BP community,

We are planning to list our property “in service” for short term rental use starting January ‘23. We are making some repairs to the property this year in the months of November and December. We purchased this property back in October.

Our repairs expenses will be incurred in 2022. However, rental service will start in Early 2023. Our revenue from this property for 2022 will be zero. Considering this, would we be able to deduct our business/repair/travel expenses when we file our taxes for 2022? If not, is there a way to deduct them next year?

I would avoid Hawaii if you're starting out. @Cole Schlack - By "small window", you are trying to time the purchase, which is not the best strategy when it comes to building long term wealth. I would rather advise OP to run numbers and see if the deal makes sense using conservative estimates. Kissimmee and Davenport STR zones have regulations at state and county level that are here to stay. Hawaii is a different ball-game. In Hawaii, if your local government or HOA change the rules surrounding STR (which has happened to a few I know, and they were led to the purchase by experts in Hawaii Real estate with knowledge of STRs), you are stuck with a liability which you might have to sell at a loss because it can't be used as a STR anymore.

I have researched these properties bought by international buyers and run by PMs who do not do a good job. Don't get me wrong, I have seen some PMs who are highly rated and are doing excellent, but they are few. Eventually, people (specially families) will want to spend more on a highly rated rental than a mediocre rental with low prices. No everyone reserves the lowest priced property in STR booking websites!

@Jeff Smith - It all depends on how conservative your numbers are and if you have stress tested your deal/analysis. Agree with all above regarding market saturation and decreased occupancy compared to 2020-2022 data, so it makes sense to utilize 2019 data for a better insight. As more folks move into STR space, specially in markets like Disney/Orlando, occupancy is bound to suffer. However, we also have to keep in mind that there are still new developments and properties being built in this area and for a 5BR property, the listing price is close to or above $500K for these new constructions in STR zones inside community resorts. Vacation rentals will continue to operate and flourish in these areas.

WIll folks/new owners make a huge profit right out? Probably not. 

Will folks survive the competition? Depends on time line. If thinking about long term, then probably yes, because rental nightly prices will continue to rise with inflation but your monthly PITI will be the same.

Bottomline - Please stress test your analysis using conservative numbers and have enough reserves to cushion back if your occupancy suffers for the first year or so. 

Disclaimer - We have bought a property in Kissimmee area for STR use.

If you want help in running numbers and analyzing deals, PM/DM me. Good luck. 

@Lauren Salvani - They are extremely knowledgeable and have a stellar team. I personally feel that they root for our success because it is in turn their success! I have bought one property with them and learned a lot during the process as they are educators too. I do look forward to doing more business with them. Feel free to reach out via DM/PM if I can answer more specific questions. All the best!

@Josh Green - Hey, thanks for the info! I came across TDT (Tourism Development Taxes) - Is this a separate tax from county tax and do I need a separate license for this? I tried calling the county office multiple times, but was put on hold for hours :-(