All Forum Posts by: Jacob Stevenson

Taxes are doing the same where we invest.  Rents have increased substantial amounts as well though so rentals still cash flow.  What is keeping rents low in your area?

Is this a new development?

Quote from @Kyle Tusing:

Sounds like you came across a great deal, I have been thinking of the best way to do this but so far not much has came to mind. The only idea I have would be to have a contract where you take a portion of the properties this year and cover part of the existing debt but limit the retired owners gains to under the 250k for capital gains if possible. then take the other portion next year to limit his tax liability and additionally recoup some of your cash lost from the first half purchase.

 Thank you for the reply, would there be a way I could do a construction loan on 1 or 2 properties and then by the rest on contract?  Thinking I could rehab a couple over the next 6 to 12 months, recoup a big portion of cash but also get him his debt payoff number.  Just brainstorming a few here after reading yours.

I'm discussing the purchase of eight properties with a retired owner. He sold a couple of his last year and one of his biggest concerns is not paying more taxes.  He also wants around 180 k to pay off existing debt and be debt free.  

My goal is to get all the properties under contract, I have enough money to do 20% on the portfolio but would prefer to not use all my cash.  

Any suggestions on ways I can structure the deal to limit his tax burden, get him the cash he needs, and preserve what I can to find more properties.  

thank you

Quote from @Michael Evans:

Jacob,

What market are you in? Three weeks to get a construction loan and do the rehab? Seems VERY optimistic. Be sure you are realistic about your schedule or you will end up way upside down on your numbers.

Good luck! 

 We closed the deal and it worked out pretty well.  Ended up selling the larger property with more rehab work two weeks after we closed on both properties to another investor.  

Second property was vacant for about 3 months as we looked for tenants and decided exactly what we wanted to do to the house.  Once we had renters found and a move in date, we completed the rehab in about 3 weeks.  Full bathroom remodel, new flooring throughout and fresh paint.  Had to redo all plumbing as well, it was cast iron and not worth splicing the good and bad. With an unfinished basemen, kitchen and bathroom close together, only took about a day.  

Can't do every deal but there's many ways to make deals work.

Quote from @Colleen F.:

@Phat Dao  how old? what's the cost? What is standard in your area regarding AC.   Do you need a ducted system or will minisplits do? It is not an one size fits all answer.

A lot of variables but I believe radiant heat isn't a negative so don't do just because you think it would be better.  Factor in if you need the space the radiators take up, cost of replacing radiators, age of boiler, and price different heating/ac systems.

We bought a house last year with new boiler and old, big radiators.  Painted radiators black and installed on space saving radiator and it looks/works great.

Good luck.

Quote from @Matthew Heeringa:

I have some of the same questions trying to get a short term rental started/approved in the Sioux Falls area.  Curious, are you under the impression that you are required to get a lodging permit with the state in addition to your city/local conditional use permit? Reading the local ordinances for my area makes it sound like the state license is only required if guests stay longer than 14 days? 

 We are getting a lodging permit, I do believe you have to do that no matter the local ordinances.  

Quote from @Wes M.:

@Jacob Stevenson Talk with staff in the planning and zoning department - not council members as they won’t know how to direct you. There should be an application form to substantiate your compliance with the requirements of the ordinance. Speak with other hosts on your community as well - they will know the important permitting details.

We are the first STR in the community! First to go through the application process for sure, the ordinance was put into place in 2020.

Really appreciate all the input, some great things to think about and check going forward. 

I went to a planning and zoning meeting today, I'm confident no one really knows what the heck to do with the short-term rental and this was put in place to hopefully not deal with it.  Council members asked if I talked to my neighbors, which I already have.  Once I said they were on board they all seemed okay with the idea.  I think this was put in place just to limit complaints to City council. I'll go through the steps in the next three weeks and report back on the result of my hearing May 11th.  

Again appreciate all the input, first trip down this path.  Have 6 LTR and this is an exciting pivot.  The house is on a lake so if you have any advice on lakefront short-term rentals I'll take that as well!  Thank you!

We are working to make our full time residence a short term rental. Five years ago we listed our property on STR sites and had one booking immediately. It went well, we got a five star review. It was a ton of work though so we bumped our prices to a spot we felt it would be worth all the work, we never received another booking lol. We didn't mind, it was a lot of work!

Now, we own another home and want our previous full time property to be a full time STR. As we work to make that happen, we are finding a number of ordinances and laws we have to overcome to make that happen. The city ordinance is:

17.68.13 Vacation Rental By Owner (VRBO).


A. Purpose. These regulations are designed to set regulations and standards for
persons owning and/or renting Vacation Rentals By Owner (VRBO) properties
within the City in order to protect the health, safety, and welfare of the public,
and to minimize the impacts of such use on neighboring properties.
B. Applicability. These requirements shall apply to all VRBOs, regardless of
whether they qualify as a principal land use or an accessory land use of thelot.
C. Permit Required. It shall be unlawful for any person to operate a VRBO on a
lot within the City without first obtaining a conditional use permit in
conformance with Chapter 17.96. The permit required by this Chapter is in
addition to any license, permit, or fee required elsewhere in this Ordinance or
required by StateLaw.
D. Permit Application. In addition to the requirements of Chapter 17.96 for all
conditional use permit applications, the following information is required:
1. The owner(s) shall have received a South Dakota Vacation Home
Lodging License from the South Dakota Department of Health. A copy
of the license shall be provided to the Authorized Official.
2. A copy of the owner(s) South Dakota Sales TaxLicense.
3. The name, address, and contact information for the Local Contact, if
applicable. See Chapter 17.68.13(E)(2)below.
E. General Requirements. All VRBOs shall meet the followingrequirements:
1. The maximum occupancy allow in a VRBO shall be no greater than two
(2) persons per bedroom, plus four (4) additional persons. For purposes
of this section, children age five (5) and below are not counted as
occupants.
2. Where the owner(s) do not reside within thirty (30) miles driving
distance of the VRBO, a Local Contact shall be designated. The Local
Contact shall reside within thirty (30) miles driving distance to the
VRBO. The owner(s) or Local Contact, whichever is applicable, shall
be responsible for responding in a reasonable time to complaints about
the VRBO. This information shall be supplemented within a reasonable
time upon changing the designated Local Contact. Failure to do so may
101
result in the review of the conditional use permit pursuant to Chapter
17.96.08.
3. The owner(s) shall keep records as required by SDCL 34-18-21. The
report shall be provided to the Authorized Official upon request.
4. Occupancy of recreational vehicles (RVs), camper trailers, and tents
shall not be allowed. Children under the age of thirteen (13) are allowed
to “camp out” in a tent on the lot but count toward the maximum
occupancy.
5. The minimum age allowed for the principal renter of a VRBO shall be
twenty-one (21) years of age.
6. Quiet hours shall be from 10 p.m. until 7 a.m.
7. The maximum number of day quests allowed, not to include overnight
quests, shall be double the maximum occupancy of the VRBO.
8. The use of open fires, fire pits, fireworks, charcoal burning grills, gas
fired grills, or other devices shall comply all relevant federal, state,
and/or local laws.

I am curious, can I just list it on AirBnB and other sites not VRBO? Am I grandfathered in because my house was a STR on VRBO before the ordinance went in to effect? I will be the first full time STR in our community, I believe the goal of much of this was to keep them out. I'm pretty determined though! Thank you in advance for your advice and reply.