All Forum Posts by: Simon W.

Interesting setup — I've come across a few lease arbitrage/STR hybrids, but this one stands out because of the scale and the way you're structuring it around investor capital rather than an operator-led guarantee.

You're right to highlight the operator risk. Since the lease is under the investor’s name, the downside lands heavily on whoever signs. If the operator underperforms or, worse, walks away, the investor is stuck holding a liability without boots on the ground — especially risky in hospitality where margins evaporate fast if occupancy dips.

A few angles I’d look deeper into:

1. Exit Optionality & Lease Flexibility
   Is there a clause in the lease for early termination or assignment/subletting if the numbers don’t work out? Most commercial leases can be brutal if the operation fails.

2. Legal Liability / STR Regulation Risk
   In many municipalities, STR laws are tightening — and enforcement is ramping up, even in historically lenient markets. Make sure the lease explicitly permits STR use and that zoning/local ordinances back that up. A change in the law mid-lease could wipe you out.

3. Operator Incentive Alignment
   Is their fee structure flat or performance-based? Ideally, some sort of revenue share kicks in only after a certain hurdle rate is met. Otherwise, they get paid while you carry all the risk.

4. CapEx and Maintenance
   Who's responsible for wear and tear, replacements, repairs? STR units take a beating. The pro forma might assume steady-state costs, but real-life FF&E refreshes and maintenance can eat into margins quickly.

5. Reputation Risk
   If this ends up in your name (or your LLC), and the operator under-delivers or creates noise complaints, bad reviews, etc., that can follow you — especially if you're looking to raise funds or do more deals down the line.

The return profile is attractive on paper, but I'd run downside scenarios too — like 25–35% drop in occupancy or average daily rate, or a 6-month period of sub-30% occupancy. STR income can look amazing in peak season but quickly evaporates off-season or during regulatory shifts.

Also, I’ve been involved in similar financial modeling and risk forecasting for real estate funds and operators — happy to share insights or help stress-test your model if you're refining numbers. Always open to collaborating with folks thinking creatively like this.

Keep us posted on how it pans out.

Quote from @Tyson Meek:

We have seven LTRs with most of them being held in LLCs, which creates a bit of an accounting headache and some inefficiencies. Additionally, it doesn't make sense to set up credit cards for each LLC.

I'm considering creating a property management company and running all the costs through the property management company that will be reimbursed by the LLCs for all maintenance and capex costs.  Part of the thought process is to allow me to use one business credit card for the costs for the portfolio as a whole to leverage some of the credit card points and other rewards.  Does anyone have any thoughts or guidance on this plan? 

Thanks in advance for any help you can provide.

Hi Tyson,

I work as a fractional CFO for property management companies, and honestly, what you’re thinking about doing is something I see a lot—especially when investors start growing past a few rentals. Having each LTR in its own LLC is great for liability, but yeah, it can be a headache on the accounting side, especially when it comes to credit cards and tracking expenses.

Setting up a property management company to run all your expenses through and then getting reimbursed by the LLCs is a smart move. That way you can just use one business credit card, earn points, and simplify the accounting across the board.

If you’re planning to grow the portfolio, I’d recommend looking into Buildium. It’s a bit more affordable compared to some other options, and you can manage both corporate and property-level accounting in there. It’s not as robust as others, but it gets the job done for small-to-mid-sized portfolios. QuickBooks by itself usually doesn’t cut it well for this type of setup. Most of my clients still use QuickBooks for the corporate side, but the PM company handles owner statements and property reporting separately.

Happy to connect if you ever need help setting it up or just want to talk through how to structure things as you scale.

Quote from @Gp G.:

Thank you very much. My reporter not providing profit loss , balance sheet etc.

I just have tax return from him.

I searched on key word 'repairs and maintenance'

I see 21 item is  'repairs and maintenance' then it shows under Schedule C but value for that field as 0

It says under art V of Schedule C 'All the rental properties in SCH E'

Not sure if any issue there

 Just ask for it or have him break it down for you.

Quote from @Brian Horwitz:

Hi, I'm currently managing 100 SFH's using google sheets with QBO for accounting. I'm getting tired of paying over 700/mo for 5 QBO accounts. I have ownership of about 70 spread across 3 LLCs. I have a 4th LLC which manages all the properties. I also have a 5th seperate retail business and yet another QBO account. Accountants seem to think QBO is unavoidable. Is there a cheaper accounting/ invoicing solution out there for me?

If you don't mind have 1 platform and just handle multiple properties. You can get a PM platform with Accounting Module and just group them as properties/portfolio. 

Buildium is pretty affordable for that type of stuff.

You can look into AppFolio as well.

Quote from @Dani Beit-Or:

I'm looking to partner with a builder to raise funds for a syndication holding long-term rentals. We've worked through most of the financial aspects, built in buffers, and taken a cautious approach.

One key priority is setting up checks and balances to reduce the risk of fraud, especially when it comes to handling funds. I want to make sure there are multiple layers of oversight to prevent issues caused by a bad actor or rogue employee.

Here are some ideas I have so far, but I’m looking for more:

1. Two signatures required for checks over $1,000 – Does the bank actually enforce this? And what happens with electronic payments (Zelle, wire, ACH, etc.)?
2. I hold the account in my name and grant them access – Would this create any liability for me?
3. Legal agreements – Of course, I’ll have an attorney draft and review them, but I want to come prepared with ideas to strengthen protections.

What other safeguards or ideas do you suggest?

I was going to write a whole essay on this lol

As a former developmental controller in NYC and approving checks when the construction/builder company was requesting funds, here are a few thoughts.

Dual Controls:
Require two signatures for draws $10k+ (banks enforce if set up). For electronic payments, use multi-user approval thresholds in your banking portal.

Segregate duties: Builder submits AIA docs → Your team verifies lien waivers/notarization → Separate approver releases funds.

Structural Safeguards:
Hold accounts under an LLC (not personally) with clear operating agreements.
Use project-specific bank accounts – no commingling.

Your $1k threshold is too low – focus controls on major disbursements. Having managed 200+ construction draws, dual signatures become meaningless without documentation verification FIRST (which AIA G702/703 forms enforce).

Happy to discuss further. Feel free to add me. 

Quote from @Saurabh Kukreja:

Do you use any fancy tool that you plug in your numbers to calculate your net per year ? Or Just use excel ?

I use excel , but many times I forget to add any expenses and then it messes up the calculations.

How do experienced people do it ?

 Simple answer is Investors have people like me and many others in BP to keep the books clean as possible, usually running some form of accounting tool/platform. You can use Quickbooks, Xero, Stessa, and many other options. 

Even if you aren't a property management company, you can still use platforms like AppFolio, Yardi, Buildium, and so on.

Excel makes it too easy to forget something.

It is balance sheet heavy but for some reason, most investors in BP are just focused on P&L and they stick with these free accounting platform that doesn't even utilize the Balance Sheet.

A lot of the time when I clean up client's books, it's mainly in the balance sheet that needs to be fixed up.

Quote from @Artur Kadesh:

@Simon W. If you just put a 0 for MISC 🤔Well maybe you can help me out with next : I have a 7 different corporations and LLCs that I have to file for 1099NEC how do I do that in Buildium? They told me that I can file only for one 🤷‍♀️

I believe it is only 1 corporate per Buildium subscription.

While you can still do it by changing the name and EIN when using the 1099, the vendors are going to show up for ALL since there really isn't any way to code to a specific business.

Quote from @Artur Kadesh:

@Simon W. Right! It can but only if you're a management company you'll have to file 1099 MISC and then 1099NEC .I only need to file 1099NEC because I AM a property owner.

I don't understand: I am not a PM company - I run an accounting firm and I did it for my client. He doesn't own a PM company. Using buildium for accounting purpose only.

Quote from @Artur Kadesh:

Thanks for your advice! I have Buildium right now and I like the tenant management part so I think I will just add QBO for an accounting I can also file 1099.

 Buildium can file 1099s. I did it for my clients.