Rental Property Investor · Southwest Louisiana Southeast Texas Arkansas · Member since 2017 · 4 posts · 2 votes
We Will be converting one of our long-term rentals into a short term rental soon. Current tenants are moving out next month. We have some work to do but hopefully will be listing as a STR by August. We are and have always been self managing. A little bit overwhelmed about getting all of the mechanics of running an STR together. Any advice? The market in this area is mainly people traveling through or coming here for work. There are several refineries being built in the area.
Rental Property Investor · Member since 2023 · 1k+ posts · 922 votes
1y
Checklists. It's the only way to keep minor details from escaping whoever is on site. Checklist with every detail for the cleaners. Checklist for pre-check in. Checklist for afternoon of checkout.
We use a maintenance software that the cleaner can check off the items, report damage, attach photos and it makes a report. If we later get a guest report we can change a setting for what was missed, in spite of the checklist, to only accept their checkmark with a photo from that day showing it was completed. We turn it on for 5 or 6 turnovers then remove the photo requirement when they reach regular compliance.
Rental Property Investor · Member since 2023 · 1k+ posts · 922 votes
1y
Checklists. It's the only way to keep minor details from escaping whoever is on site. Checklist with every detail for the cleaners. Checklist for pre-check in. Checklist for afternoon of checkout.
We use a maintenance software that the cleaner can check off the items, report damage, attach photos and it makes a report. If we later get a guest report we can change a setting for what was missed, in spite of the checklist, to only accept their checkmark with a photo from that day showing it was completed. We turn it on for 5 or 6 turnovers then remove the photo requirement when they reach regular compliance.
As you transition your property from a long-term rental (LTR) to a short-term rental (STR), it's crucial to understand the tax implications of this change. LTR income is typically classified as passive income, which is not subject to self-employment tax. In contrast, income from STRs is often treated as active income, particularly if you are actively managing the property yourself. In this case, the income may be subject to self-employment tax, which is currently 15.3%.
However, there are tax planning strategies available to potentially reduce or avoid this self-employment tax liability. One common approach involves structuring your ownership and operations through multiple entities. For example, you could hold the STR property in one LLC, which then leases the property on a long-term basis to another LLC that is taxed as a C Corporation. This second LLC would be responsible for the actual short-term rental operations. This type of entity layering can help shift the income in a way that changes its tax treatment.
That said, implementing this kind of strategy requires careful planning and precise execution to stay compliant with IRS rules. It’s strongly recommended that you consult with qualified professionals, specifically, a tax advisor experienced in real estate and an asset protection attorney who understands entity structuring and tax implications. These professionals can help you design a structure that aligns with your financial goals, provides legal protection, and minimizes your tax burden.
Establishing the right advisory team at the outset can make a significant difference. It can help you avoid costly mistakes, ensure compliance, and give you peace of mind as your short-term rental business grows.
Wishing you success!
Disclaimer: This message is intended for educational and informational purposes only and should not be interpreted as legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication. Please consult with qualified professionals regarding your specific situation.
Congrats on the transition—STRs can definitely boost returns if managed well! Since your area draws work-related travelers, consider tailoring your setup for longer stays: strong Wi-Fi, workspace, and mid-stay cleanings. Also, don’t forget the tax shift—STRs follow different rules than long-term rentals. If you ever want to walk through the tax side or cost recovery strategies, happy to chat.
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
1y
@Debra Lyon Converting your long-term rental in Orange, TX into a short-term rental is a smart move, especially given the demand from traveling professionals and refinery workers. Set the property up with essential amenities like high-speed internet, smart locks, and washer/dryer access, and consider offering weekly or monthly discounts to attract longer stays. Use automation tools like Hospitable or PriceLabs to streamline bookings and guest communication.
From a tax perspective, STR income is generally reported on Schedule E if you're not providing hotel-like services, which avoids self-employment tax. However, if you or your spouse materially participate (e.g., 100+ hours and more than anyone else), you may qualify for the STR loophole, allowing depreciation and losses to offset W-2 or active income, even without Real Estate Professional status. Also, check local licensing, permit, and occupancy tax requirements in Orange County. With proper setup, compliance, and tax planning, your STR can become a high-performing, tax-efficient asset. This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.
Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
11mo
Attention to detail with the furnishings is key to good reviews and long term success.
You have to fully furnish everything, right down to the cutlery and tupperware (I had a complaint from an MTR guest once because they couldn't find the vegetable peeler!).
As already mentioned, a checklist is great for this, and then you need to inspect periodically, because dishes break and vegetable peelers disappear.
Also consider the quality of your furnishings: Provide nice towels and linens, and avoid the crinkly plastic mattress protectors (my personal pet peeve as a guest!).
INVESTOR FRIENDLY CPA®5241 Reviews
Copeland Morgan LLC4.770 Reviews