All Forum Posts by: John Carbone

Quote from @Conner Olsen:

I’m interested in developing a 4-pad glamp site of Tony homes (comes with oven, fridge, tv, shower, toilet etc). What extra amenities should I provide? I was thinking a deck with a hot tub and grill. Anything else that would get people to rent? The property is walking distance to a lake.

Yeah you should add as many things as possible. Are you hooked up to city water? Fire pit, hammock, or grille, maybe add hot tub to one or two at first and see how it goes relative to the ones without. If you have the right zoning and do it right, you should have success in this market.

don’t mind some of the comments from some of the legacy folks on here who think you can only have success in a traditional large dwelling.

the reality is millions around the world have always, and will continue to pay for hotels (which are under 400 square feet) so if you offer a good product you will get market share. 

the trend is cheaper housing on vacations (without sacrificing quality) to offset the high gas prices, high food costs, and high attraction prices which will continue to only go up up up. 

Also, all of the new construction (aka soon to be new competition) is all concentrated at the top end of the market. If you are holding 4 bedroom rentals, the bulls eye is on your back with the new inventory coming.

On the other hand, smaller dwellings are hard to pull off with zoning and restrictions, and nobody is building new 1 and 2 beds at prices that are attractive.

Quote from @Luke Carl:

I would say it probably happens more often than not especially if housewife or househusband is doing that managing. And around here they always are. 

The person with the W-2 job though from my understanding can also be the one that materially participates. It’s not too difficult for someone with a full time job to do the 100 hour rule a year. Whereas it’s nearly impossible for a full time w-2 to qualify as a real estate professional. 

Quote from @John Underwood:

Quote from @John Carbone:

Has anyone filed taxes yet as a W-2 employee who owns only STR, rents for on average less than 7 days per rental (STR), and materially participates (usually requires 100 hours or more in a year and more than anyone else)

I’ve heard there are amazing tax benefits if you fall under all of the categories. My understanding is you do not need to pass the “real estate professional test” for this.

This seems like a big loophole for STR investors. Does anyone have experience going through this?

I did a simple Google search.

Read this:

What Is Material Participation? | Millionacres
https://www.millionacres.com/taxes/what-is-material-participation/#:~:text=Get%20our%2043%2DPage%20Guide%20to%20Real%20Estate%20Investing%20Today!&text=Material%20participation%20refers%20to%20a,to%20measure%20gains%20or%20losses.

I’m aware of what material participation is, i just wanted to see if anyone has personally done this and if there were any issues or pitfalls with doing it.

buy a million dollar cabin, cost segregation, 200- 250k tax deduction against w-2 income and rinse and repeat? Is it really that good? Surely there has to be some drawbacks? I’m sure audit rate on this has to be astronomical and just need good records? 

Has anyone filed taxes yet as a W-2 employee who owns only STR, rents for on average less than 7 days per rental (STR), and materially participates (usually requires 100 hours or more in a year and more than anyone else)

I’ve heard there are amazing tax benefits if you fall under all of the categories. My understanding is you do not need to pass the “real estate professional test” for this.

This seems like a big loophole for STR investors. Does anyone have experience going through this?

Originally posted by @Collin Hays:

We manage two dozen properties, and I can count on one hand guest damages over the last decade.  The minimum age of 25 knocks out most problems.  Folks don't generally spend big bucks to tear a house up.  

However, we have found that the larger homes for multiple families endure more wear-and-tear than smaller homes.  A lot of folks together for several days can do some damage.  Even then, nothing too noteworthy.  An occasional broken stool, lamp, or hole in the wall.  Fix it and move on.  

Have you ever had a guest try to claim a lawsuit on any of your properties? Trying to determine if llc is truly needed from a statistical risk assessment.  

When you say it’s marked joint on schedule E, does that mean it can still be a sole prop but there is a reference to it on the MFJ tax form? I’m in a state that is not community property. 

Originally posted by @Kyle Smith:

Such great points everyone.  Marie great point. I do plan on having a walking trail and that’s a great idea. Thanks.  Yes, I am fully aware that COPNA is very strict with their guidance of tree cutting.   I feel I have done a good job in that regard. 

Anyway, thanks everyone for the input. I’m glad I ran this by you guys. I’m planning on leaving them to maintain the focus on the mountains vs the golf course.  Thanks again.  

I concur, I like the idea of keeping them In this scenario.

Off topic - do you happen to have a soil scientist that you know of? I can’t find anyone to map a piece of land.

One of the reasons it may be sitting still is because the financing on something like this is extremely difficult. You will need a local community bank that keeps the notes in house. Depending on your area, this may not be possible, so it would require a cash buyer for this property. 

It depends if you can find anyone willing to do the work for a reasonable price within a reasonable timeframe. 

I always wondered how this works for tax purposes. Do you file each room individually or is it aggregate since it’s still just a single family home?