All Forum Posts by: Michael Hooper

I'm in the process of closing on my first rental property. I currently live in the Middle Tennessee area, Murfreesboro specifically and I'm purchasing a quadplex in Cincinnati Ohio. I feel pretty good about the property and have done my due diligence there. There area not as comfortable on is the tax side of thing. I have many questions about the type of entity I should form and how to go about doing that. I'm personally in a high tax bracket and would like to see if there is a way to shelter my business from that. My main question is though, where do I find a CPA that specializes in Real Estate. And should I find someone local to my town of Murfreesboro, or should I find someone where I'm looking to invest, Cincinnati? Thoughts? And does anyone know someone in either of these locations?

Thanks

@Jimmy Moncrief They aren't trying to charge me to look at tax returns. I'd be happy to see your spreadsheet. I have my own, but I'd love to see if I'm missing anything. But the main reason for my question is that this isn't just a normal apartment, its an extended stay hotel. I don't really know how they differ from apartments, but they seem like they'd take a lot more work.

@Account Closed I just sent you a link with the listing.

@Account Closed I'm not basing it on his 90%, but I was basing it on his revenue. Currently I just have numbers from a packet, which is how I got 85%, but before I purchased I'd ask for tax returns to verify. The seller is asking just under $400,000 for it. 

@Account Closed Do extended stay hotels have a vastly different vacancy rate than regular hotels? I would think that hotels have a pretty low vacancy during the weekdays, and fill up on the weekends, but extended stay hotels (or at least this one) rents by the week. I don't know if that changes anything. The current owner listed 90% on his listing, I took his actual revenue and just divided it by the gross potential revenue to get my number of 85%. for 2015, but like I said, 2016 is running a lot lower.

@Account Closed The cashflow would support a person living on site for free with small weekly salary, but nothing near 50K. The average weekly rate is around $300, though the current owner says he can get around $350/week in peak season. I don't know what average occupancy is for the area, but for 2014 and 2015 the occupancy was between 85% and 90%, but the property manager died in 2016 and the owners started doing it themselves and they're at around 60%. The property is just east of Chattanooga. 

I've been exploring a deal in Cincinnati. It seems to be a great price, 20 units for $18k per unit and its in decent condition. But part way through the due diligence I was informed that they are all apart of the Excel program, which is house for people with mental disabilities. They're all on HAP, which is the housing assistance program. So I'm not really even sure what to ask from here. I have no experience in this area. Has anyone dealt with this before? Are there any added headaches I need to be aware of? I was given last years financials, and everything seemed to look fine, but I just don't know what to expect.

I'm looking in to buying an extended stay hotel. From the previous owners tax returns, they seem to turn a decent profit. However the more I think about it, the I'm not sure how to manage the property if I acquire it. Its only 11 units, and the current owners manage it themselves. Since its week to week rentals, I doubt a property management company would handle it. I assume I would need an onsite resident manager, as I live 2 hours away, and was wanting this to be a pretty passive investment from a day to day stand point. Does anyone have any experience in this? Is there an option I'm not thinking about? How do I find a resident manager? What's a reasonable amount to pay a resident manager that would handle bookings, cleanings, and maintenance? Thoughts?

@Nichole Stohler That's the other thing. The hotel is currently managed by the owners. I live 2 hours away and don't plan on being actively involved in the day to day management. I also don't think a management company would take on an extended stay hotel since you could potentially have to deal with new tenants every week. So it seems like the only real option for me is to have a resident manager on site that would handle the day of booking/billing tenants, fielding phone calls, and maybe doing maintenance/cleaning (or at least coordinate getting someone today do that). Unless someone has a better idea.

I assume there is a whole new world of taxes and accounting once I enter into the hotel business?