All Forum Posts by: Jon Crosby

Conventional lenders will generally only look at last 2 years Schedule E/C for STR income. Not to say there isn't some out there that will look at future potential, but generally speaking they will not. You can always just create a long term lease and then 'make the choice' to convert to an STR after you acquire the property. I'm not promoting you do that, but that is what some people do.

Best of luck to you! 

Hi @Juan Vasquez

Congrats on your big decision! Quick thoughts, will you net $100k really? Have you incorporate capital gains in that calculation as if it's an STR (and previous rental) I'm guessing you have not lived there the last 2 of 5 years. If not, then you have to think 1031 which is a whole other rat race to deal with to maximize your return.

Also, in order for us to give you an opinion, we are missing a key piece of info...what was your initial investment.  If you bought the property for $100k vs $500k there are likely different perspectives on your situation to evaluate.  

Best of luck to you! 

This is pretty much what most people do, they use their one and only 2nd home slot for their first STR, then you are stuck with investment loans thereafter. Depending on the lender you might have to sign a form or simple letter saying you plan on using X numbers of days per year...but in reality, once you have it in title, it's not like they are going to come looking for you or auditing your stays. :)

Best of luck! 

Hi @Matt J., STR's don't really use vacancy, it's occupancy which then is multiplied by ADR (average daily rate) to generate your gross scheduled income. Depending on how much management you are going to use it will range anywhere from 0 to 30% and then you need to figure out which expenses are variable to usage (e.g. electricity, gas, etc.) and those that are static (e.g cable, internet, etc). Below is a spreadsheet I created a long time ago that might help put it together.

Best of luck to you! 

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

Yes, keypad is the easiest and I have only had one person ever leave with the garage remote and they mailed it right back.  Additionally, you can covert most any newer model opener with a system like this to be able to control via app on your phone.  

https://www.chamberlain.com/sm...

In general HOA's have final right of refusal for allowing STRs in a community and HOA bi-laws can vary greatly between communities, states and municipalities. Long story short, you need to contact the HOAs directly you are curious about and ask them or have your agent request a copy of their bi-laws...generally speaking.

I have a friend who started using them in SD, he said he was able to negotiate the rate a bit so give that a try if you haven't already.  He seems happy with them, but nothing extraordinary in regards to service of quality that I could tell.   Just be cautious if you plan to 'start with them' and then move over regarding who owns your listings.  Many of these operators will own your listings on the booking sites and not transfer them to you if you want to leave.  It's not the end of the world if you have to start fresh but you will just want to be aware of that...additionally, migrating bookings is a pain the butt often especially when you have future bookings and/or deposits in their system.  

Best of luck and congrats on taking the plunge...you have to dive in...no dipping your toes.  LOL  j/k  ;)

Cheers

Here is my general rule of thumb.  If they try and cancel long enough in advance for me to get another booking, I usually accommodated.  If not, then I would offer them the ability to come back in the off season to enjoy their stay at a later time.  Anything beyond that, that is what travel insurance is for and they should have exercised that option if/when available. 

I have seen this strategy in commercial real estate often, and it's always been a great strategy when the owner of the business owns the building as well.  I will be curious to see what a CPA or real estate entity attorney might have to say regarding this type of situation.  Good question! 

Unfortunately if it's not a commercial property then you don't get to use NOI to figure out your value/price. You can only use residential comps and simply have 'notes' about the success and numbers as an STR to try and entice more buyers. This all rolls downhill, because if the property is only worth say $200k from local comps, that is all it would get appraised for, therefore even if you had a buyer willing to offer more because of the STR success, they wouldn't get the appraisal they needed for the loan.