All Forum Posts by: John Carbone

Come on Luke you know that’s bs. My company manages tons of units for investors and every single one of them is making money.  

Get rid of your PM and do everything yourself.  I can do 2 phase electric, plumbing, natural gas piping, carpentry, roofing, drug screen collections and other things associated with short term rentals.  My profit margin is about 60% of gross revenue.  I'm not paying anybody to do anything.  I've even got a lady that cleans my places between occupations for free.  I get to sleep with her too.  Can you top that?

What exactly are you looking to insure? 

- My Allstate landlord policy covers STRs too, but that doesn't include things like furniture and appliances

- We use a company called Safely for some of our high-end properties. You pay by the night (only for nights actually rented) and it covers a certain amount of damage to personal property (e.g. furniture), structure, and liability, and also offers extras like reimbursement for bed bug mitigation. 

I think some commenters are misunderstanding your concern. The PM is not reserving the right to adjust what they charge YOU, correct? Rather, they are reserving the right to add additional fees for guests and keep 100% of those fees as their revenue.

Here's what I would do if I were you:

1. Ask them for a link to their hosting profile or one of the properties they manage. Then you can go through the booking process and see what type of fees they are actually charging. 

2. Ask them for references from other clients, and ask those clients if they've ever had issues with this clause.

I'm in negotiations with a STR management company. The bit of their contract that has me concerned is that, per their contract, they can charge any fee at any amount and retain the money while also being in control of the rent pricing. I want them to have control of the rent pricing, so they can adjust it to make sense for the market and to optimize occupancy, but I'm concerned about the unlimited control over fees, which could be a conflict of interest. Example: If they upcharge the fees or base the fee as a % of the booking or an extra $100 per cleaning, it's revenue being collected in addition to agree upon 25% of revenue generated by the bookings. And/or if the overall price of the booking is no longer competitive because of the fees, they'll lower the rate instead of their profit on the fees. I'm fine if they need to upcharge a bit, but I'm concerned that they aren't sharing exactly what fees they are going to charge or how much, or if it is really at cost to them. They say they're just covering their costs with the fees they charge to customers, but they don't seem to want to share their pricing models or even a list of what fees they will charge. We've been trying to work on a solution, but the solutions they come up with keep the vagueness of the fees in place.

I can't tell what degree I need to be concerned about this, and would like your opinions as investors and business owners. 

@John Carbone I think one major issue is the use of “loophole”. There is rather black and white language in the Regulations that define how these assets are treated. There are likely some CPAs who have not educated themselves on this and/or have not read the regs and CCA memo.

Transient rentals have been around for a very long time, pre Airbnb. My guess is many professionals never saw these OR assumed they follow bed and breakfast rules (incorrectly).

Both Eger and Lucero cases can be used to infer how the tax court (correctly) has viewed STRs as far back as 2015. Eger even proved that STRs are not similar to LTRs for tax purposes.

We have not used anything other going through TNTAP.