All Forum Posts by: Dylan F.

Quote from @Aaron Zimmerman:

@Dylan F. So it's a management entity for the rental properties?

 Correct. We also do cost segs to offset the income

Quote from @Aaron Zimmerman:

@Dylan F. Got it  - makes sense. Would definitely recommend connecting with a cpa on here to make sure your properties are appropriately structured. 

What activity is in the S corp?

Basically all the transactions of the rental business, from mortgage payments to amazon purchases

Quote from @Aaron Zimmerman:

May I ask a couple questions:

1. Are the properties within the S Corp? Or is it just Management?

2. What was the initial purpose of creating the S Corp? 

The STR loophole can be very valuable but it really comes down to the implementation including proper entity structuring.

There are quite a few real estate accountants on here and I’d recommend reaching out to a few to make sure you get someone you like. 

We do not own the properties in the S-corp, they are under our personal names. We have a great insurance umbrella for protection. Not sure if this is the best way to structure our business though. Again, need some advising on this.

I was under the impression that running the business through an S-corp was advantageous for tax purposes to avoid self-employment taxes amongst others. End goal is to eventually have enough properties generating enough profit to outpace our current w-2's by a substantial margin

I need a real-estate specific CPA & financial advisor that is familiar with the short term rental business. We need help with bookkeeping, payroll, tax prep, and overall tax strategy for our situation. Our current CPA is a family friend that doesn't live nearby (we are in Fort Worth, TX) - and we have kinda outgrown him to be frank.

Some color on the situation: My wife and I have high income W-2 sales jobs, but we use bonus depreciation from our short term rentals to offset the tax burden. Our short term rental business is setup as an LLC S-corp, and does over $500k/year in revenue between our 5 homes. I use Quickbooks, but I'm not very sophisticated at using it and definitely need some help on the bookkeeping side. I also keep an excel spreadsheet (I'm old school) of our income statement/P&L with all of our expenses broken down by house, so my records are clean. We have 5 homes that need their expenses separated out in Quickbooks (as of now they are all combined under one business), as I do not want to have to keep an excel file anymore.

I also don't feel like we are taking full advantage of our taxes, so would like some advising. I had to advise my current CPA about the STR loophole, so needless to say, I need a more real estate-specific CPA going forward.

I know soliciting on here is not allowed, so please shoot me a dm so I can provide my email. It's not allowing me to post it on here.

Thank you!

Investment Info:

Single-family residence buy & hold investment in New Milford.

Purchase price: $380,000
Cash invested: $150,000

Arlington Short Term Rental

What made you interested in investing in this type of deal?

Cashflows from previous STR investments in the area

How did you find this deal and how did you negotiate it?

On-market. Knocked on seller's door and grew relationship with him

How did you finance this deal?

Conventional

How did you add value to the deal?

Designed it specifically for Airbnb - added a lot of amenities to backyard

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $285,000
Cash invested: $120,000

1st STR that got me hooked in the space. Located near AT&T stadium in the Arlington Entertainment District.

What made you interested in investing in this type of deal?

The combination of RE, design, & customer service as the key factors in a successful STR business.

How did you find this deal and how did you negotiate it?

Off market through my realtor. Not much negotiation, seller had a fair price in mind, and I knew we could cash flow form there.

How did you finance this deal?

20% down + conventional loan @ 4.5%

How did you add value to the deal?

Re-did the backyard & turned the backyard garage shed into a game room. Also re-did the kitchen and fixed up aesthetically.

What was the outcome?

Cash flow from day 1

Lessons learned? Challenges?

Know your numbers going into a deal. Renovations will more-than-likely cost more than expected.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

N/A

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $636,000
Cash invested: $170,000

My 2nd STR in the Arlington Entertainment District. Performing very well as it is in the upper/luxury tier of available STR's in the area, and we designed it quite nicely in my humble opinion!

What made you interested in investing in this type of deal?

First STR gave me the confidence to do another in the same area

How did you find this deal and how did you negotiate it?

Off the MLS (funny enough) - financing fell through with previous buyer, so I offered full price with partial waiver, knowing I could cash flow well. Appraisal came in slightly lower than asking price, so we negotiated down.

How did you finance this deal?

HELOC out of primary + cash reserves. Only used small % of HELOC amount as I didn't want to over leverage myself.

How did you add value to the deal?

Design and added amenities. House was already brand new, so minimal renovations were needed.

What was the outcome?

Outcome has been stellar so far. Occupancy is high, and cash flowing well.

Lessons learned? Challenges?

Trust your yourself in the process, as doubt will inevitably creep in when relatively new to investing. Buy in STR zones where there are strict laws and a finite amount of homes so oversaturation is never a concern.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

N/A

Hey all - wanted to see if anyone out there has used a DSCR loan for an STR. I have a few STR's all under conventional loans in my personal name (title is in LLC though), which is effecting my DTI/shows up on my credit. I am a high W2 income earner, but need to start buying under my LLC, as eventually my DTI won't be sufficient enough to secure lending.

I'm wanting to know a couple things:
1. What kind of rates/terms can I expect from a typical DSCR loan on a STR in the current environment?
2. What proof of revenue is typically used? (AirDNA, my personal Airbnb history, etc?)
3. Where would you start your search for the DSCR loan products/ are there any places you'd recommend shopping first?

I'm in Fort Worth area, and would love to connect with any fellow local investors as well. I appreciate the help, thanks!

Morning y'all - I am closing on a home in Arlington, TX that will be used as a short term rental. This is my 2nd property/1st investment property, so I was wondering what insurance carriers/rates I can expect on a 1600 sqft home (w/ a 700 sqft detached shed that will be converted to living space) in 76011 area code.

Obviously, I realize home insurance policies from home to home can vary dramatically.. I am just looking for a ballpark number. I talked to my insurance broker, and he came back to me with a quote for about $2200/year.

Also, is there any "must haves" in terms of specific coverages that you would need for an STR that you wouldn't normally have for your primary residence? I requested loss of income insurance, and increased my liability coverage already. Anything else?

Please comment with your thoughts. I appreciate y'all's help!

Dylan

Originally posted by @Robert Westbrook:

I'm a wholeseller here in the DFW marketplace and one of our investors loves to buy homes in our rough neighborhoods, Fairpark. He buys for 30k puts 20k into them and the rents them for 900 a month. He's getting great return and as long as you have a property management group that is local to the area you typically don't have many issues. That's not to say there aren't risks involved, there are always risks in rentals.

This is precisely what I want to start doing... would love to connect. Does this person mentor by any chance? (I'm reaching here, I know)