AirBNB in Big Bear, CA. Where to start?

Question

Hello. I’m planning on purchasing a cabin in Big Bear, CA and renting it out on AirBNB. Where to start? Do I rather to open up an LLC first? Any good real estate lawyer in SoCal? Appreciate any info

Cody L. · Answer

Don't know that you'd need a real estate attorney or an LLC.  Don't complicate things.  Find a property for sale where the numbers seem to work, then buy it.  Post on airbnb.

Samara Huntley · Answer

@Maksym Chernov. There are great aspects of an LLC If you’re wanting to protect your personal assets if a lawsuit arises etc. However, their are cost and other things to watch out for. Just weight the pros and cons and do what works for you. I’m an Airbnb investor and absolutely love this avenue of investing. Just find a property where the numbers work and do it!!

I use Airdna to get my statistics when analyzing STR’s. Totally recommend you check it out, it shows your areas average occupancy rate, daily rent and revenue. I also utilize BP’s airbnb calculator. Hope this helps and good luck!!

Samara Huntley

Cody L. · Answer

Yes.  I think there is a bias on this site to believe that LLCs are/do much more than they are/do

Katie L. · Answer

@Maksym Chernov

There are several considerations that can go into the analysis of whether you need an LLC or whether a large insurance policy will suffice. Will depend on several factors like the type of property, type of tenants, your risk tolerance, other assets you own, your estate planning, laws where the property is located, etc.

Any lawsuits would be limited to the assets of the LLC and not your personal assets (assuming you run the LLC appropriately and the corporate veil is not pierced). But, an LLC will not limit you from liability in total. You can still lose your investment in the LLC. If you're going the umbrella insurance route, make sure it will cover you for several things including just the routine slip and fall (like mold or earthquake). You'll also want to ensure you have a good property manager to look after the upkeep of the property if you are not there to notice anything deteriorating or which may need attention.

Creating an LLC in California would cost you a minimum tax of $800 every year. You would have ongoing filing requirements with the State and would need to keep business records and documentation.

You also want to look at whether a pass-through entity helps your bottom line and your taxes. There is a new 20% pass through deduction you may qualify for that could help you, but not everyone qualifies. You should still be able to get this even if the properties are not in an LLC, if you qualify.

These are all things you will want to discuss with your attorney and CPA. If you need references for either of them in San Diego, let me know.

*This post does not create an attorney-client or CPA-Client relationship.  The information contained in this post is not to be relied upon.  Readers should seek professional advice.

Cesar Ruiz · Answer

@Maksym Chernov I don’t think you should look into the ownership title aspect as much as what your looking for, size condition area etc, that’s more important you can always change title but it may take you time to find exactly what your looking for..or it may already be available..don’t get too much analysis paralysis I’m in the area (not an expert) so whatever I can answer I’ll be more than glad to

Maksym Chernov · Answer

@Brian Gerlach this one will be my first one and I want to make it right, hence taking my time. But you’re right, prices are going up

Maksym Chernov · Answer

@Samara Huntley thanks for your advice

Brian G. · Answer

@Maksym Chernov why not make a move now? Ready, fire, aim! Prices will continue to rise imo in 2021. Good luck!

Maksym Chernov · Answer

@Brian Gerlach thanks. I got do as much research as possible and, hopefully, make a move in mid 2021.

Brian G. · Answer

@Maksym Chernov just get a standard commercial fire/liability insurance policy with $1M coverage (this is likely what the insurance company will require). Whether or not you need an LLC or Umbrella policy in addition is debatable and more a question about overall asset protection. Unless you have a whole bunch of assets/net worth to protect it’s a non issue. Once you operate at scale imo it’s a different discussion. No legal advice given.

AirBNB in Big Bear, CA. Where to start?

Most Popular Reply