All Forum Posts by: Tim Schroeder

 Your CPA "forgot" to include depreciation???!?!?!?!?

@Chase Cline Let's say I buy a place for $200k and it generates $50k in revenue. Let's assume $20k profit and $20k mortgage payments. I am going to be paying taxes on $40k which will be at least $8k. So with the $20k profit minus $8k in taxes, I'm really only getting $12k cash in my pocket after the tax year. That's only a 6% return on the purchase price.

You're looking at this wrong. ROI analysis is pre-tax. Just like when you look at mutual fund returns, it's pre-tax. When you get a job, your salary is pre-tax. When you win the lottery, it's pre-tax. In your example above, the ROI is 10% (20k/200k) on which you will pay some amount of tax. Just like you pay on mutual funds, salary, or lottery winnings.

@Chase Cline

Meaning if we broke even with $0 profit but paid $10k in mortgage payments, we are taxed on $10k net income as if the mortgage payments weren't expenses

What you're missing is that mortgage payments are two things (four if your insurance and taxes are escrowed). 1) Principal: You're paying back the bank loan and adding equity, 2) Interest: An expense incurred in obtaining the loan, 3) Insurance: An expense incurred in holding a valuable property that you want protected, 4) Taxes: An expense incurred in property ownership.

Remember that the principal payments add to your equity. You'll get that money back someday when you sell it. Therefore, you can't claim it as an expense.

Zoning? Are you saying you rented it in your driveway or in the street or something? No wonder you got shut down. If so, that's a good thing. Sorry if I am misunderstanding you.

I live near Denver and rent my 29' family RV out on rvshare.com. Last summer I made about $7100 in 6 months (I don't rent it in the winter). The RV is 14 years old and is worth about 15,000. Expenses are zero because insurance is included. So it's not bad free money when you already own one, and I still get to take the family on vacations. You could totally make a small business out of it if you bought 5-6 of them, and you have the time to deal with it. But, the pickup/dropoff procedure can be a pain. I work full time. Usually people want to pickup or dropoff at times that are inconvenient to me. I get tired of explaining how the toilet works to newbies. I worry they're going to crash it and kill people. It adds miles to the RV. They call me when they run the battery down, or they get a flat tire. (Of course I get a lot of that with my STR cabin rentals too). If I didn't work full time I might buy a few and make a small biz out of it.

You also should ask yourself if north texas is a popular place for RV'ers. Most people want the mountains, coasts, and national parks. You're smack in the middle of the country. Also, those 21' travel trailers that you pull behind a truck are a dime a dozen. Your renters need a big truck to pull it. I think self-contained RV's like mine are more popular. Dad drives up front, the kids play in the back, and Mom makes sandwiches in the kitchen. Even the journey is a LOT of fun. With a travel trailer it's just a long road trip stuck in the truck.

 Be nice. There are lots of ways to make money. Yours is not the only way.

Ohhhh please tell me more about the Schlage locks. I bought them and SmartThings hubs for both my properties planning to do just what you said, but I just haven't had the time. I thought at the time that I could at least use their app to change codes manually but that does not work when you are not close to the lock. I can't wait to implement something automated like this.

Also.... I bought SmartThings-compatible EcoBee thermostats and Zwave motion sensors. My holy grail is to set it up so on checkout day once the sensor says no-one has moved for an hour or so, to turn the thermostat way down. Then on check in day, turn it back up an hour before arrival. Might even adjust the A/C when there is no movement during the day (knowing guests have gone out for the day). Have to be careful of this though, so as to not piss people off when they come home and it's 90 degrees inside.

Yeah the interface is not the best and it's not intuitive but it works well and the support is great. They just added price push capability for AirBNB and VRBO which I haven't tried but am excited about!  I like to tweak prices a lot based on demand, and doing it in multiple places for each property was just unscalable. Now you can set pricing on OR then push to ABB/VRBO (plus a bunch more that I don't currently use). OR also synchronizes all iCal calendars & even pulls the ABB/VRBO reviews for cross-posting on your own site. They also do payment processing for the standard 3% fee. So I set up a website for direct bookings (www.lazybearcabins.biz) using Wix which uses a widget from OR for payments. Direct bookings avoid the guest and host fees but are still processed by OR, and these direct bookings update the master OR calendar, which is exported to AirBNB and VRBO. Actually, any website can use OR for payments.

Other nice things... the shared ribbon calendar is really nice. All your properties and all listing sites on a single configurable calendar, plus occupancy tax reports, automated rental agreement creation/mailing/archiving, travel and damage insurance for guests, quickbooks integration, door lock integration (not mine, unfortunately), email autoresponders, and more. Most of this for $20 bucks. Some things cost an extra $10 like the QB integration. Cheap for what you get.

Well then that sounds like a great compromise, especially in the beginning when you're getting your feet wet. Do it for a while then wean yourself off and go solo and raise your profit. OwnerRez is worth the $20 even for one property. The email automation alone is well worth it.