All Forum Posts by: Garry C.

My first buy and hold had no down payment. I paid cash, with money that I had been investing in the stock market for a number of years. This was 2012, and little did I know that the stock market would keep climbing the way that it has. Regrets? None. I've done pretty well with REI. And that initial investment of $70k just appraised for $160k. I'm pulling equity out now in order to buy additional property.

In the past 4 years of vacation rentals, I can count on two hands how many times I've 'talked' to a customer. Virtually all of our inquiries/bookings are done online, via email and listing sites. Why do you feel you'll need anyone to speak to customers during the inquiry/booking process?

My vacation rental is in Winter Park. I find the town to be much less commercial than Summit County, more family oriented I guess. Also, while the market there is fully recovered now and it's hard to find a good deal for REI, it still seems relatively inexpensive compared to other resort towns.

Added bonus: It's not that far from your existing rental in Estes Park.

I would start by contacting your neighbor and asking if he has plans to paint it? Let him know you want to schedule and appraisal of your building, but would wait if there are plans for improvement of his building. If not, offer to pay half if he schedules it soon. Depending on cost. If it's reasonable, don't haggle, just offer to pay the whole thing. But I wouldn't start there without first knowing the costs and any existing improvement plans.  

Theresa's advice is great. And I would trust my housekeeper over guests all day long. I've had a couple of guests like this in the past few years. Always from AirBNB, never VRBO.

With that said, if there is an upcharge from my housekeeper due to something that required extra cleaning, I always pass through those costs. I've only had one bad review from a traveler like this, mostly they know what they've done and don't try to fight it or lash out, just accept it and move on. However, if you don't have many great reviews to even out a possible bad review, you may think twice here and just eat those extra costs.

If you do get a bad review, be sure to respond to it publicly. Let people know that you are sorry that things didn't work out during that guest relationship. But don't 'fight back', or if you do, make sure it's done politely/delicately.
I had a guest show up a few hours prior to check in time and basically shoo housekeeping away, then complained that it wasn't clean and asked for a discount. When I declined, she left a 1 star 'complaint' review. I responded with the following:

"We sincerely appreciate your feedback, as we strive to make our mountain retreat clean, comfortable, and attractive for all of our guests. I’m truly sorry that we were not able to make you happy at the end of your stay. We will be speaking with housekeeping to ensure that the property is spotless in the future, even if guests arrive several hours prior to the agreed upon check-in time."

I believe this review helps me, and would with or without my reply. Any property with ALL 5 stars is probably going to be looked at with a skeptical eye. A small number of unhappy customers is natural, because you simply can't please everyone. When I see 40 great reviews and 1 bad one, I figure it's a great place and they didn't pay family and friends to write all those glowing reviews.

I use the eRentalLock. Just add a .com to that to check out their web site.
They come in a couple of styles (brass, nickel, bronze) and configurations (deadbolt, handle, etc.). They're a standard Schlage electronic lock with a chip built in that allows for remote configuration. Plug in the time and date for check-in and check-out and the site spits out a code that will only work during those times. Hint: Add an extra hour on each side, so as not to lock folks out for being a few minutes early or late.

I use these in my vacation rental and long term rental units. For the LTR, I can let people schedule showings on their own without me having to be on site all the time.

Disclaimer: I am not a CPA, nor a Lawyer.
However, I am an owner/PM of a Vacation Rental in a Colorado mountain town.

I started out with a dream of a second home in the mountains too. Then toyed with renting it out to some family friends after I remodeled it. This quickly turned into a full time business for me. And by full time, I spend about 4 hours a month on it and it's much more lucrative than my long term rental in the metro area.

I always assume that the IRS knows everything. It's just the safest route, in my opinion. However, you bring up a good point about those 14 days not including maintenance. I find that there is always some level of maintenance to be done, since a vacation rental has a lot of traffic. It's never anything major, but the little things add up. If I get up there once a quarter, there are usually at least 3 or 4 small things that need fixing. So, if you wanted to be there more often than that, you could certainly find valid maintenance reasons to visit.

As for how many days it was rented... this should be very easy for anyone to find out. I use VRBO and AirBNB to book my rental. I also have my own web site with calendar that reflects bookings. Those calendars are all tied together so I don't double book. Therefore, it's easy to see online just how many days I'm rented.

And signatures/documentation when you rent it? Yes, this is mandatory. You don't want to allow ANYONE to stay in your property without a lease in place to protect you and your property. Even if it's just the short term rental agreement on file with the vacation rental sites, which people must check a box to prove they've read and agree to before renting.

Again, my recommendation is to assume the IRS knows all. There are plenty of real benefits that the government gives to RE investors, so no need to hide anything. Consult a CPA for the full run-down of good reasons to rent this out and take full advantage of the associated tax breaks.

Ah, the old LLC question... it's more than just an LLC question though, it's also about how you would run this business, as a sole proprietorship, partnership, corporation? S-Corp or C-Corp is essentially what it boils down to most often.
You'll want to consult with a lawyer to help you make the best decision for you on this. But here is what works for me - An S-Corp LLC, with the property deed in the name of the LLC.
Why? Because having the business/property owned by an LLC gives me a level of protection from lawsuits.
Is it unassailable? Can they pierce the corporate veil?
Well, that depends on how much work they want to do. I'm also looking at setting up a land trust for the deed as an extra level of anonymity.

As a landlord, it's not if you'll be sued, but when. I feel it's best to do as much as possible to protect myself in advance. Including leveraging the property so there isn't a lot of equity in it to tempt people to try and take it away, as well as making it difficult for them to come after my personal assets.

What a great post, thanks for sharing!
I take it these are all in your local area of Watertown, NY? It appears that way from some of the comments above. Those numbers are awesome, these properties seem to cash flow really well for the prices you're able to pick them up at.

Nothing says 'take action' like taking a whole lot of action. This is impressive. I may have missed it, but are you doing this 'full time', or do you also have a W2 job? If the latter, that would be even more impressive. And proof that we really can start up a new career/business in our 'spare time', which is what I've been working towards.

These seem like mostly cash deals, so I was wondering where that was coming from, if you were doing hard money or something. But then at the end you mentioned the financing you were hoping to find in the near future. With all you've done so far, I'm sure you'll find a way to get that done and keep moving forward. But my question stands, how did you finance this first group of properties?

Lessons learned are important. Often times we see lessons, but not a lot of learning. I think a lot of people don't take action because they're afraid of making mistakes. Although if we don't make mistakes, we don't learn anything.
Your suggestion to have a checklist of things you'll need to do to get each property up to your standards is gold. I'll bet that really helps with rehab estimates.
I've learned a few things just reading this post, so thanks for that.

The fact that you end by listing your goals is great. I just returned from a trip to Costa Rica about a week ago. We love vacationing there, so a rental in that part of the world is likely a good investment in my mind. Interesting to see that long term you want to branch out into more vacation rentals around the world. That's a whole different animal from long term rentals. Based on what we've seen from you thus far, I don't think those challenges will be insurmountable. Good luck!

How's your credit? If it's in good shape, you might find good rates with crowdfunding sites like Prosper. There are a few dedicated to REI investing as well, they often sponsor the podcasts, if you poke around the site enough you should be able to find links to them here on BP.

If you have the cleaning team hired and the keyless entry setup, you're most of the way there. I would also recommend a good handyman, your cleaning crew can often help to locate a good one. Also, be very clear with the cleaning crew about your expectations. Have a checklist that you want them to follow to make sure they are consistent. Also, ask them to communicate with you promptly any issues that they find after a stay, so that you may deduct this from the security deposit (vrbo) or file a claim (airbnb).

I use both VRBO and AirBNB. VRBO mainly, with AirBNB to fill gaps last minute. I find that this is all that's needed to keep my STR full.