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Michelle Hadian
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Under contract for STR with DSCR... Now what?

Michelle Hadian
Posted Feb 13 2024, 09:29

Hello! We just got under contract yesterday for our first STR. We found an off market cabin in the Smoky Mountains, and it's a fantastic deal. But... now what?

Do we form an LLC before closing and open a checking account in the LLC for all cabin related cash flow?

We will self manage- I plan use PriceLabs, but do I also need Hostfully or Hosptitable, etc?

I'm certain there are forums and BP videos to guide us on the next step, but most the ones I've watched and read are on how to get a deal, or how to finance a deal. I need to know what to do to set us up for success and get launched once we close in 30 days.

Also wondering how best to maintain the past guests who have stayed at the cabin (there are tons of nearly 5 star reviews, that I doubt I can transfer to us- or can we?) They have great listing history on all the major sites.

Thank you in advance for any help!

Deal : 1300 sqft 2 bedroom/2 bath cabin in Smoky Mountains on half acre, furnished, for $465k.   Unfinished basement, so we plan to finish right away and make it a 3 or 4 bedroom with a game room downstairs, doubling the bedrooms/beds/square feet. Has $49k/year in rental history.

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Kevin Luttrell
  • Lender
  • Orange County, CA
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Kevin Luttrell
  • Lender
  • Orange County, CA
Replied Feb 13 2024, 16:16

You'll get a lot of different opinions on whether or not an LLC is necessary and how much protection it actually provides. Many do advise forming one, especially for STRs since there is greater liability risk. I have one personally. Others argue that it actually wouldn't provide much protection in a lawsuit (especially if your Airbnb/VRBO account is in your personal name) and you're better off just purchasing liability insurance.

If this is your first STR, I wouldn't worry about channel managers yet (Hospitable, etc). Just set up on Airbnb and/or VRBO directly. Some on here get more bookings from VRBO, but from what I've seen most people in the Smokies get the majority of bookings from Airbnb (me included). I know several who only list on Airbnb and do just fine.

Pricelabs is great and I highly recommend it to anyone self-managing. Pretty sure it can sync directly to Airbnb/VRBO without the need for a channel manager. 

No there is no way to transfer the reviews unfortunately, and no way to maintain past guests unless the previous owner happened to obtain all their emails and is willing to provide. You'll have to set up a new account, even though it's for the same property. 

Sounds like a great deal. Appears to be underperforming currently and there's a ton of value add potential. Good luck!

Feel free to reach out if you have any more questions while getting up and running.