All Forum Posts by: Peter Faulkner

Hey folks, I am closer to Stratton than Mt Snow

 Hi @Michael Baum - yes. I’ve considered self managing. I just don’t know that I want to deal with it. I’d make a ton of money if I did though. 

Which part is against the tax law?

Hey folks,

I have a beautiful STR in southern Vermont that I've owned for a little over 2 years. I do not think my current manager is a good fit for the property, for a number of reasons. I've put up with them because they do a decent job keeping the place rented and I have a near perfect reviews on AirBnB. But so many things could be so much better. I won't air my dirty laundry in public but here are a few areas that I have issues with:
1) We don't have a contract (shame on me) though we do have some agreed upon terms that were written. Because of this, they have changed their fee structure on me two times in the past two years

2) They don't have back up cleaners so when the cleaner can't clean, they block off my calendar

3) They do not have easily legible financial statements and do not provide 1099s 

4) They have made decisions that have required my money without consent

5) They block off check-ins on Sundays

6) They are not great with technology - though they try to use hostfully to list on many platforms, I will frequently see that my listing is not up on VRBO for example. They also don't use automated locks and manually change the guest code every few weeks

7)They have terrible response times when I reach out to them.

There's a lot more... these are just a few things that are top of mind. I'd switch but frankly, I think most of my options in Southern Vermont may be even worse for one reason or the other. 

Anyone have great experiences with highly efficient, extremely effective PMs in the area?

PF

Thanks, @Sarah Waterman - you mean 40% back of the depreciable value? So if the deal is $1M, and 20% is land value, the rule of thumb is that I could get roughly 40% of $800k ($320k) as an active loss? 

My understanding is that, given the right deal, my down payment could be recouped in two years (maybe even year one) through tax savings with this strategy. Would work with an AirBnB too. 

All of the above man. This is all top of mind for me. And I'm not saying I am moving forward, just that I am learning. 

Regarding my CPA, there's absolutely no way I can qualify for REP status - single guy, predominantly W2, etc. For me, it would be an audit waiting to happen. But, the effect (with investing in a hotel) would be similar. Ultimately, I'd like to do a cost seg on an AirBnB or Hotel to offset my active income. 

Thanks, @Myka Artis and @Neil Henderson.

@Tim Delaney - I found the opportunity listed on a brokers website that specializes in hotels. I called the broker just to see if I could get a peak at the financials and learn how hotels are underwritten. At the time, it was under contract. Over the weekend it fell out of contract and the broker contacted me. 

I'm very comfortable evaluating SFR and small (and medium sized) multi, but hotels are another game. That said, this may be a "deal". It's "value add" at the least. I say that because it's not currently in operation. The seller is offering it for 1/3 of what they paid for it when they bought it 3 years ago. They lost money in 2019. I don't know what it did in 2020. It's 22 rooms on 160 acres of land and you can buy it for less than what you'd pay for a starter apartment in NYC.

My largest concern (outside of not knowing anything about hotel operations) is that it is VERY active - has a restaurant, would need employees, would need active marketing, high touch customer service etc. It's not passive AT ALL, which is why (I think) the IRS views these opportunities as "active income".

The way I started in SFR and multi was by looking at deals so you gotta start somewhere!

PF

I recently met with a CPA and he recommended I invest in a hotel for tax purposes. Longer story there, but I've since found a discounted hotel that seems to be a good opportunity. What resources, or people, have folks used to a) evaluate opportunity/risk b) conduct due diligence c) operate (turn around) a hotel, and make a value add opportunity into a winner. I'd even be willing to pay for a consultant. 

Any input would be appreciated.

http://www.triadcommercial.com...