Help!!! LLC, licenses, permits etc.

6 Replies

Hi all! I am very new to the VR business (still in research mode!), and could use your help. My business partner and I are looking to begin this journey by purchasing one VR lakefront cabin in Wisconsin. I could (and probably will!) ask 1,000 questions from now until then, but tonight's puzzler is should we form an LLC? I've read a few people state that an LLC isn't an option if you have a mortgage on the property.

Also, what licenses and permits will we need?  Is it worth paying $99 to a business who researches and notifies us about what permits/licenses we'll need? 

We are grateful for your help, and your precious time,


Originally posted by @Jeff Oberts :

Also, what licenses and permits will we need?  Is it worth paying $99 to a business who researches and notifies us about what permits/licenses we'll need? 

That is a business transaction.  After every business transaction someone ends up richer and someone ends up wiser.

@Jeff Oberts   These questions are market specific and you're not likely to find someone who's active on here that's doing a cabin on the same lake as you. I do cabins in the mountains in Tennessee so I'm happy to answer these questions as if they were asked about my area. 

LLC.... You'll need to talk to a business attorney to find out if this is for you. It is not for me. If you already own the property you'd have to refinance into the LLCs name, if they even let you, so there's another 5k~ right there. My take on it is... if it's financed and you have insurance... don't bother with an LLC. This is an OPINION.

My cabins are not in the city limits they're in the county. So.. I called the county and asked what to do! I had to get a $15 business license and a tax ID from the state to pay taxes. (You have to pay sales tax and occupancy tax on short term rentals. Something that far too many people "over look". They don't last long). 

In my market, in fact in my state, Airbnb just announced that they'll collect and pay our taxes for us starting March 1st. So we're only collecting and remitting from VRBO from then on. I've spoken with VRBO it looks like they are also working on changing this policy. Again, market specific. Just do some googling. 

You will be using Airbnb and VRBO/Homeaway. Two different apps. Most folks find this gets the job done. 

Question is... why do you have a partner and what is their role? If they are providing the money why do they need you? They can easily and inexpensively hire someone to manage their property that already knows the answers to these questions; whether its a simple Airbnb CoHost or Evolve. And if they're not providing money... why do you need them? 

Good luck! Happy to help any way I can! 

@Jeff Oberts   I see you live not too far away from Wisconsin, and therefore possibly not too far from your VR.  Couple of questions for you:

Who is going to do the ongoing maintenance and housekeeping/restocking in between occupancies?

Simple repairs can take a $2 part; like the flapper in a toilet tank, the outdoor porch light, or the batteries in a remote.  Some repairs cost nothing, like unclogging a toilet/sink or unfreezing a garbage disposer.  But doing that repair in a timely manner is of the utmost importance.  How will you insure it's done in a timely manner?

Your tenants insist on paying rent in cash.  How are you going to collect?

Your tenants bring a keg of beer and mix of over/under age college students throw a party.  What are you going to tell the police when they contact you?  What are you going to tell a litigious attorney  representing one of those students that was injured at that party?

All appliances eventually break or become obsolete.  Washers, dryers, refrigerators, stoves, hot water tanks, air conditioners, heaters, dishwashers etc.  I'm not going to ask if you have the ability to change one of these appliances.  But I will ask you if you have the capability to buy one from a "Box Store" and transport it yourself at a moments notice?  

What is your competition?  If someone doesn't like you moving in to their territory, they can do things like shutting your water supply off at the meter on a Friday evening.  It's a simple 60 second procedure.  I've done it many times at my own STRs.  What if your competition decides to throw bottle caps or other garbage in your driveway/yard every time they drive by?

Tenant has a flat tire and is locked out of their VR.  It's snowing.  They call you.  What are you going to do?

Tenant lets the neighborhood cat in the house to feed it.  Now your house has fleas.  What are you going to do?

Tenants move out and they overfill the trash collection cart.  Garbage collector refuses to collect it.  What are you going to do?

There is a bad storm or other event and you have lost electric or water or cable service.  What are you going to do until it's reestablished for your renters?

@Lucas Carl   Thank you for the response!  I did not know Airbnb and VRBO were planning on collecting and remitting taxes.  Is that in all areas? 

The other guy actually approached me to become part of the business.  He is a very good friend (I was his best man), and together we can pool our money, brains, resources, researching, workload etc.  I have contributed a lot of things he had not thought of, and he has as well.  He is also very skilled in the IT world (I have some IT knowledge but not nearly as much as him). Together, I believe we're off to a pretty good start on this journey.

Thanks again.

@Paul Sandhu   Thanks for the response Paul.  All the points you mentioned will definitely have to be taken into consideration.  Luckily, our current jobs will allow us to get away at a moment's notice in order to respond to any emergencies at our property.  Also, we plan on researching all housekeeping and maintenance options in the area, prior to making an offer on a property.  We have done extensive research up to this point on taxes, insurance, marketing, legal issues etc., and have spoken to many accountants, attorneys, insurance agents and other VR owners.  Although we cannot prevent (most likely) all of the things you mentioned from happening, we plan on being as prepared as possible prior to jumping into this business.  

Your post definitely made my wheels turn, though, thank you for that.  It's a reality that I no doubt will have to deal with at some point.  I realize we'll take our lumps when starting this business, but it won't be for lack of preparation.  We'll just have to troubleshoot, grow, and learn from our mistakes as challenges arise.

Thanks, Paul.

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