All Forum Posts by: Joel Oh

Just finding out that with a full time W2, it is nearly impossible to qualify the RE status especially with short term rentals. Hence, they are looking at STR as business income rather than passive income. What a bummer!

However, I am seeing posts here that many people utilize their short-term rentals for RE status by using Schedule E.

Can you really qualify as a REPS with a full time W2 income?

Also,

I am involved in rehab and management, so I am claiming my STR income under the Schedule C.

Why aren't you guys claiming it under Schedule C and getting the deduction?

What is the real benefit of claiming your short-term rental income in Schedule E? Is it just for the RE status?

Thank you in advance!

Are you doing a turn down service at night, providing meals etc? If not then you should be on schedule E.

Pretty much impossible to be a RE professional if you have W2 income.

I heard the average nightly stays must be more than 7 days to qualify for Schedule E.
Pretty confusing area!!

Yeah.. I am so disappointed that I can’t have RE status.

0 Votes

Hello guys! I have a good W2 income as well as STR income.

2023 is the first year I thought I could qualify for RE status as I am working as the property manager, handyman... (750+ hours) man I worked hard!

However, I am seeing posts here that many people utilize their short-term rentals for RE status by using Schedule E.

Can you really qualify as a REPS with a full time W2 income?

Also,

I am involved in rehab and management, so I am claiming my STR income under the Schedule C.

Why aren't you guys claiming it under Schedule C and getting the deduction?

What is the real benefit of claiming your short-term rental income in Schedule E? Is it just for the RE status?

Thank you in advance!

1 Vote

Quote from @Zachary Cain Humphrey:

Quote from @Joel Oh:

Today is my exact 1 year of STR journey and I finally hit the $75,000 mark for 2023!

It was a long journey but I learned so much.

I invested around $75,000 so I made over 100% cash on cash return.

Next year's goal is $250,000 and quitting my 2 jobs.

No one believed me when I first started it but I am getting there!

If I can do it! Everyone can do it!

Congratulations Joel! Where did you end up investing in?

It is Midwest Metro! I think the revenue is lower than popular vacation spots but the % return is higher with lower housing prices here. A different business strategy is required but definitely works!

1 Vote

Hello! I am looking for a CPA who can help me save taxes for selling a flipped quadplex in St.Paul, MN.

I purchased this property in 2022 and did a lot of rehab. (Floor, electric, roof, plumbing, siding....)

I used one unit as an owner-occupied ever since but can have a renter anytime if I want.

I have a W2 job as a real estate professional and also an LLC for STR business (Just me on the LLC so no nothing complicated)

The house is under my wife's name and she has a W2 income.

We usually file a joint tax but never studied much about taxes! (Was a big mistake! XD)

I am planning to sell this property in the next few months if there is an appropriate tax plan.

Please let me know if you are interested or know a good CPA who can help us!

Thank you so much :)

1 Vote

Saint Paul, Minnesota

Quote from @Mindy Nicol:

Hi Joel, good for you. I am exactly a year into one property as well, however we are in a more expensive and perhaps competitive(?) market than you so I put a lot more down to get a decent house that wasn't a fixer. The VRBO and Booking fees, opex plus updates to the house I had to do mean I will just break even this year. I see it more as an opportunity to improve a property over time, build equity, and increase nightly rates, slowly I will see the return. We are going through a real shift in STR here with many dropping out.

Where are your bookings coming from for the most part? Did you have any expenses?

Mindy

Hi Mindy! I think breaking even is great if you didn’t do much work by yourself. At least you will enjoy the asset growth and tax write off which can be a pretty good number.

I focused on the competitive advantage and it helped me a lot to save money. I am not targeting wealthy, long-term vacation people. I focus on the budget-friendly family and friend groups who are visiting the city. A lot of times, their options are limited so they are happy with what they get which is not A-level property. I think the important thing is understanding what the market wants and what I can do the best in the given circumstancs.

I didn’t have a lot of capital and didn’t want to borrow a lot of money so I started small and affordable.

I just use Airbnb because I already get a good occupancy rate and I don’t have time to manage multiple platforms since I am the property manager on top of my 2 other hats.

I hope this helps! Good luck 😄

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Quote from @JD Martin:

Quote from @Joel Oh:

Quote from @Julio Gonzalez:

@Brian Plajer

Your property definitely has the potential to benefit from a cost segregation study. Determining whether to do a cost segregation study or not has a lot variables.

- Are you in an area where land is very valuable leaving you with less to depreciate?

- How long are you planning to hold this property? If less than two years, cost seg probably isn't a good route.

- Are you planning to do any renovations? If so, I always recommend getting the study done prior to rehabbing.

- What is your ROI and the amount paid for a cost seg study?

- Do you have a current need for that cash flow generated from the tax savings?

- Could you go reinvest it in another property to build even more income?

- Would you have net income or net loss without the cost seg study?

- Are your real estate investments active or passive?

- Are your losses locked up against your passive income?

There are a lot of factors to consider when get a cost seg study to determine if the benefits outweigh the costs. If you are able to get REPS status, that would help tremendously. Have you obtained any detailed cost/benefit analysis quote? Most cost segregation study companies provide the quote for free. If you need any help or have any questions, feel free to reach out!

Hello Julio! Can I ask why do you recommend doing it prior to rehab? Doesn't it get more potential value of depreciation once the project is finished?

You can expense a lot of what would otherwise end up being capitalized and recaptured on depreciation when you sell. Given the choice it's almost always better to have expenses than depreciation.

Thank you so much! I will remember that! Expense over depreciation

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Coastal NC, North Carolina

Quote from @Matt Mertz:

Congrats Joel! It's always good to feel your work vindicated.

One thing I'd caution you on is to not quit your W2 job(s) too quickly, even if you hit your goal. Give it a little time and use the extra money for future investing or rainy days.

Thank you! I totally agree! I see that it is getting challenging managing 3 Airbnbs on top of my 2 jobs. Challenges make me stronger! Just not sure how many I can manage on top of keeping the quality of my W2 job. Gotta learn how to work more efficiently

1 Vote

Quote from @Sarah Kensinger:

No matter what, you did well! Keep your goals for next year in the forefront of your mind and I'm sure you'll hit them!

Thank you so much! That is the mindset!

1 Vote

Quote from @Justin Brickman:

Don't let them hate on your numbers haha. Keep going! I love to see it

Thank you so much! I see no hate here XD They are all love and attention haha

0 Votes

Quote from @Kyle Wise:

@Joel Oh how do you access that tab?

Menu - insight - conversion - booking conversion!

Have a nice day :)

1 Vote

All Forum Posts by: Joel Oh

Joel Oh has started 11 posts and replied 92 times.

Post: I am hearing STR doesn't count toward REPS status.

Post: I am hearing STR doesn't count toward REPS status.

Post: After 1 year of STR journey

Post: Planning to sell a quadplex in St.Paul, MN

Post: After 1 year of STR journey

Post: Cost segregation study?

Post: After 1 year of STR journey

Post: After 1 year of STR journey

Post: After 1 year of STR journey

Post: Have you guys checked this tab on Airbnb?