Quote from @Yair Zarmon:
Hi BP Community,
Newbie real estate investor here looking for some guidance from those with more experience.
I'm in a unique situation where I need to quickly purchase and manage a few short-term rentals (STRs). The reason? I sold a number of securities this year and must reduce my capital gains tax liability. To do this, I need to acquire STRs and prove material participation. That's not the hard part...the real challenge is choosing the right market on a short timeline without prior STR experience.
I’ve spent countless hours researching, underwriting, and convincing myself I’ve found the perfect market - only to second-guess and start over. I’d really appreciate any guidance or recommendations from those who have been through this process before.
Key details:
1. Out-of-state investing: I’m comfortable being a remote investor. With today’s automation tools, managing from a distance isn’t an issue.
2. Budget and financing: I have $250K set aside for this investment, and financing is essential to qualify for bonus depreciation and cost segregation - key strategies for offsetting my long-term capital gains.
3. Time sensitivity: I need to prove at least 500 hours of material participation before December 31, 2025, so time is of the essence.
If anyone has market recommendations or insights, I’d love to hear them!
Hey Yair!
Pleasure chatting on the phone with you today 👍
I think we covered a ton of info that is super beneficial to you and would be to others.
I want to add here for others that may be asking themselves if STRs are viable TODAY:
I operate in the Tampa Bay market - mostly Pinellas county (Clearwater, Largo, Seminole, St Pete, etc) and we’re making great returns with Todays rates, todays prices, and todays competition.
There’s three critical components to making this a success for myself and for my clients:
1) Buying the right properties at the right price points with the right locations and features
2) Budgeting for, and executing a professional finished product through a professional design and furnishing team with proven track record of success
3) Boutique property management to ensure your property is taken care of, continues to perform long term, and puts more money in your pocket by passing on the efficiency savings back to you (I charge 15% for clients only; at least at the time of this post)
biggest caveat:
You have to have an adequate cash position to make this work well. For clients who are out of state or otherwise wanting to be completely hands off, this means a cash budget minimum of $225k is recommended (20%-25% downpayment, closing costs, design and furnishing costs) and even better opportunities if you have more. Any less, and you are likely over leveraging, or not budgeting to create a great STR; which is how you fail as an STR investor. OR, you need to be very involved - 100-200 hours of time to self furnish/design/manage etc.
This can seem like a high barrier to entry for most newer investors, and it is, but that’s a part of why it’s lucrative. Much like running a business, you want to have the high barriers of entry - keeps the competition down and you more profitable 👍
If you or someone you know is ready per the above and wants to explore more the process and numbers, feel free to DM me and we can do an introductory consultation for free. I don’t like to blurt on here publicly the numbers or details as I’m also an active buyer (buying 2 more this year personally) and want to keep the business with those I trust and want to work with ✌️
