All Forum Posts by: Ryan Moyer

I can't imagine doing this without a CPA.

For a bookkeeper, I'm not sure this is still necessary with modern available tools, many of which are free.  Maybe if you grow large enough that you are hiring full time employees and whatnot instead of the typical pay-per-visit cleaners/handymen.

For me I just give each property its own bank account and its own credit card, both connected to Stessa.  All income gets automatically deposited into the bank account, and Stessa counts it as income.  All expenses get paid either by the credit card or direct debit from the bank account, and Stessa automatically records them as expenses.

I'm not even sure what a bookkeeper would do, other than maybe add category tags to the expense transactions.

I am no CPA but my understanding is the same as yours, that the type of mortgage is completely irrelevant to how the IRS classifies the property.

 I think the OP is talking less about bad reviews and more about AirBNB's propensity to sometimes ban entire accounts without warning, often without giving a reason.  The larger superhost groups out there and airbnb forums have lots of people that have run into this (small relative to the total number of hosts, but still enough that "it could happen to you").

One common one is a guest complains about a camera that doesn't actually exist.  Host says there is no camera.  Airbnb shuts down the entire host's account for months for "investigation".

Another one we saw popping up last year was with video doorbells.  Most hosts mention the video doorbell in their description.  But there's actually an option buried deep in the settings where you have to disclose the video doorbell.  Airbnb doesn't make this obvious and most hosts miss it (thinking they've done what they need to do by listing it in the description), and if a guest complains about the doorbell and it's not listed there Airbnb bans your entire hosting account (and all of your listings) permanently, with no recourse.

These are a very small percentage of hosts in the grand scheme of things, but for people with a lot of listings making the majority of money on Airbnb it's a lot of exposure/risk to have that all in one place with a company that has a history of just kicking people off the platform without any explanation.  We're talking superhosts with thousands of 5* reviews.

 I would assume with a channel manager you can connect all the different Airbnb accounts.  You wouldn't need to log in to the accounts themselves very often, everything would handled through the channel manager.

They all have their pros and cons.  The big issues with each are...

AirDNA - Estimates are based on 1 year trailing data.  So when the market is shifting quickly (as it is now) the data lags and it ends up inaccurate.  IE in 2021 when the market was kicking, Airdna was using 2020 data and projecting low.  Now in 2022 with a bit of a slowdown, it's using outlier 2021 data and over projecting.

Rabbu - Rabbu I believe uses the next 90 days of calendar for its data.  So it is pretty subject to seasonality.  They try and use past seasonality ratios to calculate based on next 90 days calendar so they're accounting for it, but not using hard data, but if you pull up the same house in July and January it will give pretty different annual projections so obviously there are some issues with not having a whole year's worth of data.

Enemy - Good in a year round market like Orlando.  Difficult in highly seasonal markets.  If you pull up Destin at the start of June you see June/July calendars, which are going to look awesome, but you have no idea what it's like in the fall or winter.  Same thing if you look in the winter, you're going to see a bunch of places with empty calendars, but obviously houses in Destin aren't doing like $30k/yr like projecting out December numbers would give you.

As with most things, the answer is a combination of all 3.  Enemy method I think is more broad "is this place renting well or not?".  Luke has obviously used it with great success for both himself and his clients, so there's lots to be said for real world results.

I was listening to a podcast last week and liked this paraphrased discussion the seasoned STR host was describing that he had been having several times in private recently.

New STR Investor: My occupancy rate is only 60% which is lower than expected and I'm not covering my costs. I'm freaking out!
Seasoned STR Investor: What is the historical occupancy rate?
New: Well the data last year was 90% but I underwrote conservatively at 85%
Seasoned: What is the HISTORICAL occupancy rate, not just last year?
New: I dunno, probably around 60% or so.
Seasoned:  ...

 My only concern with this approach would be that Pricelabs, Airdna, etc are backwards looking, and most people are having issues starting now or very recently.  Those things don't create a great picture of what a lot of hosts are describing where they're usually booked out 6 weeks in advance but right now their calendar is totally empty starting next week, etc.

Not that there isn't a lot of value in those things as well, but you have to really know what you're looking for.  Because Airdna paints a really pretty picture of Blue Ridge right now, but most people in the market seem to be saying the opposite going forward, even though things were really great in the recent past (which is the data Airdna is presenting).

There a relatively agreed upon answer to this.  10% of purchase price for annual gross revenue is what the market has decided is the baseline.  That is to say if a property is $1M, it should gross at least $100k annually.

Personally my own tolerances are tighter than that (I would want 150k on a $1M purchase so 15% to even start digging in deeper) but the closest thing to an accepted 1% rule in LTR's is the 10% rule in STRs. In many markets where STRs are popular the majority of homes will be listed for 10x annual gross revenue, just like a business would. If the property grossed $92k last year, they will list it on the MLS for $920,000.

Obviously expenses differ by market (property taxes, HOA, etc) so that will change a lot of things. But if you're looking for a way to quickly weed out listings that aren't even worth considering like the 1% rule does then the 10% rule is the standard. You can adjust it up from there if you are only interested in better returns.

I am the furthest thing from a CPA, but regarding depreciation recapture my understanding is the depreciation lowers your cost basis when calculating your capital gains when you sell.

IE you bought for $500k, took $100k in depreciation, so your cost basis is now $400k for capital gains purchases and if you sell for $700k you are taxed on 700k-400k = $300k.

The notion that travel was going to continue at 2021 rates and trends forever was always crazy to me.  Of course travel demand was going to level off, return to more normal trends (international, metro, etc), just like literally EVERYTHING else that boomed as a result of covid eventually returned to normal.

The world didn't fundamentally change.  Everyone isn't riding their Peletons into Zoom meetings while buying their toilet paper on Shopify websites any more then they've decided they're all going to travel 4 times as much as normal, forget hotels exist, and limit their travel only to destinations that are drivable from their large city.  All of that was temporary.

Then you have the bullwhip effect.  Everyone sees the surging demand for drive-to mountain/beach destinations, supply at those places increases, and as demand levels off back to normal occupancy lowers since supply is now higher than last time demand was at this level.  It's a well known and common term in economics.

If anything gas and inflation may be HELPING these markets hold on a little longer as people who were initially excited to get back to Disney or Europe decide maybe they need to settle for Blue Ridge just one more time until flight prices lessen.