Adding optional paid activities to my mountain STVR rental.

Adding optional paid activities to my mountain STVR rental.

Investor · Colorado Springs, CO · Member since 2011 · 322 posts · 238 votes

I'm exploring the idea of offering optional paid activities to my guests like personal chef, back country skiing, mountain climbing lessons, UTV rentals, horse back riding, fly-fishing and the like. Our STR is on the larger side and accommodates 16 with 2 kitchens and is divided to suit 3 families comfortably. I have drafted up a website and liability docs and I'm working with Fareharbor for scheduling software and plan on forming a separate LLC for this project. However, I have no experience in adventure tourism per se. The intent is mostly to make local activities available directly to my guests and not to get-rich-quick with this offering. I have a Johnson and Wales local chef and back country hiking/ski guides interested, willing and ready to go. I can only imagine taking a small fee from the guides and chef to cover expenses. I do expect to invest in UTVs and offer them out as full day or extended rentals. Per day rentals on these should be between $400-$500 and I would expect to make a return on my investment in year one and possibly make profit with these toys if all goes well. Very interested in feed back from the STR BP community.

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Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
6y

Hey @Marcello Di Gerlando, that sounds like a neat idea, but have you looked into the tax implications? All of that sounds like "significant services", especially the chef. Even if they are paying for those extras, the IRS could make that determination.

Check out this article. This guy covers the info pretty well. https://markjkohler.com/how-a-...

Outings and the like are considered significant services. Makes you more like a hotel and not a passive business like a vacation rental. UTV rentals could be construed as providing transportation. Here in Idaho, they are legal to drive on the road. That could be the case in CO as well.

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  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    6y

    Hey @Marcello Di Gerlando, that sounds like a neat idea, but have you looked into the tax implications? All of that sounds like "significant services", especially the chef. Even if they are paying for those extras, the IRS could make that determination.

    Check out this article. This guy covers the info pretty well. https://markjkohler.com/how-a-...

    Outings and the like are considered significant services. Makes you more like a hotel and not a passive business like a vacation rental. UTV rentals could be construed as providing transportation. Here in Idaho, they are legal to drive on the road. That could be the case in CO as well.

  • Investor · Colorado Springs, CO · Member since 2011 · 322 posts · 238 votes
    6y

    @Michael Baum thanks for the feed back and resource. As I stated in my post I expect to form this experiment under a separate LLC and will be looking to distance the activities in a way that it could only be construed as a separate entity. The tax implications, if kept separate, do not really scare me. Expenses such as tax will all get passed on to the guests. UTV riding options are just fantastic in my neck of the woods and we've had folks make inquires in the past. No doubt a lot more due diligence is needed before we pull the trigger and go live so I hoping to get BP family in on the brainstorm. thanks again.

  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    6y

    @Marcello Di Gerlando, I under stand the LLC, but by offering those services, you will fall under Schedule C and pay self employment taxes. I am not a tax expert but that could really hit you.

    Also, renting UTV's and the like will require some strong insurance. I am curious about what you found out about that. I am thinking of providing kayaks. Maybe...

  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    @Michael Baum brings up a good point about being warry of providing "substantial services"  

    What are other people in your area doing?

  • Investor · Colorado Springs, CO · Member since 2011 · 322 posts · 238 votes
    6y

    @Michael Baum

    Understood on the tax burden and I suspect a long a thorough discussion with my accountant is imminent. The article you recommended was a good read and start. Insurance I'm sure will be commercial and separate from what I'm carrying currently. I use Proper Insurance specifically for STRs. I've spoken with them indepth regarding additional activities like sleding and bicycles...and it kind of goes like " if its not expressly prohibited in the policy we cover it...we ask you to provide helmets, life jackets Yada yada." I recommend them. Pandemics were not expressly mentioned in the policy and I expect to claim on the weeks lost. Policy also covers nonsense like alcohol related issues, sexual assault, and punching the lights out of the neighbors. It's a good policy.

  • Investor · Colorado Springs, CO · Member since 2011 · 322 posts · 238 votes
    6y

    @John Underwood

    I'm not sure just yet what if anything other STRs are doing as I have laid it out. I expect I will uncover anyone doing something similar in the coming days. To be sure adventure tourism is a major industry in Colorado. Formulating a business model that works in conjunction with the STR is going to be the challenge, the market and demand are already established.

  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    6y

    @Marcello Di Gerlando, FYI on Proper Insurance. They are not allowing any kind of claim on pandemic losses. I use Proper as well and that is what an email I got said:

    "The recent COVID-19 shutdown has resulted in canceled bookings across the country. As many of you are already aware, this is not a covered loss under business interruption insurance. With the volume of inquiries state insurance commissioners have received, the National Association of Insurance Commissioners has released comment. Being a Maryland based company, here is comment from the Maryland Insurance Commissioner. We encourage you to visit your state insurance commissioners website to see if comments have been released. Please let us know if you have any questions."


  • Investor · Colorado Springs, CO · Member since 2011 · 322 posts · 238 votes
    6y

    @Michael Baum 

    There goes my recommendation of Proper. not surprised.

  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    6y

    I am not sure any insurance company is allowing claims based on the pandemic. You need to have a business interruption insurance and that is for commercial properties. Usually not vacation rentals. Even those with coverage, like restaurants, are getting denied.

    I have read they are trying to get the government involved and/or suing to get coverage paid out.

  • James CarlsonBusiness Member
    Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    @Marcello Di Gerlando

    That's an awesome idea. We always got the question about offering bikes to guests. We referred them to Proper Insurance for answers on that (we like Proper a lot and have used them on multiple of our own properties). 

    I'm just interested: Where's your property in Colorado ? How's it doing during Covid?

    James Carlson Real Estate
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