All Forum Posts by: Kayl Kam

Thank you all for the valuable information. It is good to know that STR still has its market despite the challenges. I would focus my research on properties that can bring an enjoyable experience to guests, such as nicely renovated house near lakes/state parks/national parks, with amenities like deck and perhaps suana and pool, also a bigger house that can host more people/pets/cars. I guess the worse case scenario is converting the STR to MTR/LTR if I cannot get enough income to sustain the business. Or do something in between MTR/STR. This is going to be my first STR learning experience if I eventually decide to kick start this journey, instead of just doing the buy and hold LTR which has less tax benefits.

@Travis Timmons Thanks for the suggestions of the locations. Do you do out of state STR and manage everything yourself, or do you have a property management? 

I live in Illinois where it is not airbnb friendly. I am thinking of getting STR in Indiana within 1 hr driving distance from Illinois. I am looking for a property in a good but relatively affordable neighborhoods like Crown Points. I also noticed that I need to get a permit to run airbnb in Indiana which is less painful than the restrictions in Illinois. I have a few questions at this point.

1. If I want to use the STR tax loophole, would living in a different state affect the advantage of the so called STR tax loophole, as long as I remain active in managing the property and fulfill the other requirements?
2. Are there other neighborhoods in Indiana that I can do some research on that is within one hour driving from say Joliet, IL, other than Crown Point and Cedar Lake? 
3. What makes people prefer airbnb than hotel these days, especially the rate of hotels are relatively competitive (airbnb becomes more expensive than it used to be), i.e. is it still a viable business for the most part? 

I am just starting out the investing journey. Please bear with me if these questions are too basic. Thanks in advance! 

Thank you! These information are very useful! 

Hi all,

I am planning to turn the current residential property (SFH, 4b/3.5b) into a rental since I am relocating to another state. I put 5% down 2 years ago (conventional loan with PMI), fixed interest rate of 2.875%, and the SFH has already appreciated by approximately 15%. Rent can potentially be close to/at break-even despite only putting 5% down. The inside of the house is in great condition, but the landscaping and deck/front porch need a bit of work to make it rent-ready (grandfather clause can likely apply for the deck/front porch wood railing that is not up-to-date for codes).

I am working with a property management company and will have a realtor and contractor come to the property to estimate how much money I will need to make the property safe for potential tenants (major expense would be the deck, front porch, and landscaping). Here are my questions.

1. LLC: If I set up an LLC for this rental property for liability protection, what steps should I take to make it happen? Do I need to ask my lender first to make sure I would not trigger the "due on sales clause", or should I just consult an attorney and have him/her do all the work? Should I find a real estate attorney located in the state where the rental property is located?

2. CPA - Would a CPA in any state be able to give tax advice and do my taxes when the time comes, or is it best to find one where my rental property is located? How much do they usually charge if I want tax advice?

3. Apparently, landscaping (cutting down some trees, removing some shrubs, etc.) is considered a capital improvement; could the amount of money spent be depreciated with the value of the house? I will consult my CPA (after I find one) but I would like to have a rough idea before meeting the contractor. 

4. Fixing the deck—if it is just to strengthen the structure of the deck, would that be regarded as a repair and thus a tax write off?

5. If the deck and landscaping take time to get done, should I still find a tenant and put limits and boundaries in the leasing contract, something like use the deck at your own risk, etc.? Especially if I do not have too much cash to get all these done up front immediately? If tenants get in and out of the house exclusively through the attached garage, and not using any pending-to-be-fixed/improved-amenities outside of the house, the current status of the house is perfect. 

Any comments would be greatly appreciated. This is my first SFH purchase and my first SFH rental. Never set up an LLC before. I am interested in continuing to do RE investment, and I think this SFH will be a good start.

Thank you! 

Thanks Theresa. This is a great suggestion! I am too new to real estate, and I did not know about Juliet style balconies. Having these balconies will significantly reduce the cost instead of rebuilding the whole 3-level deck. 

There are other "headaches" too but the deck apparently is the most expensive. 

Hi all, 

I am new to real estate. 

I am moving out of my SFH to move to another state. I paid 5% down payment in 2021 and locked in a 2.875% interest rate. The purchasing price is 425K and now Zestimate is at approximately 500K. It is in a very good neighborhood and I think the house will appreciate very well if I hold on to it for 20+ years. It is a 4b4b and likely can rent out for 2800-3000/month (near breakeven but negative cash flow by less than $200).

However, this house (built in 1984) has an old 3-level deck that will need to be rebuilt (per the inspector in 2021 no one will repair the deck).  I intend to have a property manager to help renting in out and she said it cannot be rented out if there is code violation (the deck) or safety concern. Inside of the house is in good condition and it has a lot of characters.

I am wondering if I should take a loan to fix/rebuilt/downsize the deck, do some landscaping at the same time to make the backyard as low maintenance as possible, and fix a few things like the front porch and woodpecker damage, before renting it out, with the goal of keeping it as long as possible and rent it out after these expensive items are fixed.  This house is locked in at a low interest rate and in a good neighborhood (zip code 48335) which I think will appreciate well. However, all these are very expensive, especially I will have no tenant during the repair.  I will move into a condo in another state which is another property of mine (I only have 2).  It also has a mortgage.  I can pay these 2 mortgages every month comfortably with my W2.  I feel like it is doable to pay extra for a loan to do all these improvements, but a bit risky since I am taking on a new job.  

How about keeping this house as another residential property, and take my time to repair the deck/porch say in a 2-3 years time frame, so that financially I will not be stretched too thin?  Or should I just sell it and move on?  

Any feedback will be appreciated.  

Thanks!