All Forum Posts by: Joe C.

Ask them for a written definition of what they mean by "investment property".

The NJ shoreline is probably 100 miles long. Each town has a completely different set of circumstances. It would help if you provided some more details on where you are looking at, price range, etc.

I self managed but now use a PM for my STR. It all depends. The best PM can outperform a bad self-managed, and vice-versa.

Reasons I like STR over LTR:

* No landlord/tenant relationship, no evictions

* Higher returns

* Weekly professional cleaning

* Weekly review of property condition

* Weekly repairs/maintenance performed

* I can visit the property whenever I feel like or need to by simply reserving a few days on the calendar

* Easier to raise rental rates, can react to market conditions more quickly than if locked into a long term lease

* Just as easy to outsource to a PM as a LTR, or not, in the right locations

* Easy to purchase in locations you want to visit

Government in many areas (all if you consider CDC mandates) treats landlords as the enemy, why fight them when they hold all the cards? Also STR is also buy and hold, there need be no difference there. However should you decide you want to or need to sell tomorrow, then sell since you have no long term lease involved to mess things up.

Seriously, read the forum.

Joe

LOL forgot that we are the only ones not trusted to pump gas by our leaders. 

Glad that story was helpful to show an alternate world-view. I'm not joking about the paralyzing fear. How will this person vacation in the years to come? I don't think we're going back to the old normal for a long time.

Joe

Agreed, nobody knows. But you can ask friends and family what they expect to do in the future and use that as a proxy. The following is just my opinion, just giving you my personal outlook.

For example, I last visited Playa Del Carmen in Mexico with the family approx 2 1/2 years ago and we had an amazing time. Since then I've discovered that the beach/ocean in Destin is even nicer. We do not need to go to Mexico anymore, I can avoid the airports, the mountains of stinky seaweed flowing onshore, the machine gun road checkpoints, the scams at the local market, etc. and get in my car and drive to Florida.

Unless you travel first class flying is now a truly painful experience. Does anybody actually enjoy it anymore? I haven't since 9/11, we are treated like animals. Anything I can do to avoid flying I will do, and that was pre-COVID. Now with COVID I'd rather repeatedly hit my big toe with a hammer than fly.

I live in NJ, and the local Facebook forum is full of posts complaining that the local gas station attendant's mask slipped off his nose while filling up their car and they "just want everyone in the community to know they may not be safe if they go to this gas station". Regardless of your thoughts on freedom, politics or COVID, does that sound like the type of person that will suddenly take their family on a trip to Europe next summer?

If you have an STR in an international tourist destination city like NYC or San Fran then that is likely a different outlook compared to somewhere that domestic tourists would drive to with their families. If your typical STR guests are 2 grandparents, 2 parents, 1 or 2 children (or groups of families) then my gut says they are staying domestic for a long time.

Joe

@Elaine E. you should sell and get something better.

I had been struggling with an STR I owned at the NJ shore thinking about how I was really not making enough for it to be worth all the hassle and I posted here some question about that. The overwhelming response from everyone was to sell it and get something that made money! I did and couldn't be happier.

So my response to you is, if you are on the fence about the future of the place you own, listen to your internal voice and sell and buy where you are confident and happy about the future of the property. If you have concerns about the future of the property so will other owners and eventually so will potential buyers. The longer it goes on the harder it will be to turn around and you likely will have special assessments to pay for the things the manager should have been doing all along instead of buying expensive golf carts. Recent buyers will protest paying more as they likely were at the top of their budget when they bought in the community. Your board should have been on top of the situation but they aren't, so get out before it gets worse.

At the new place get a property manager and take a break from it for a while. When you and your partner have had a few years off you might decide to get back into self-management again.

Good luck!

The prorating is not based on percentage rented vs. empty, it is based on percentage rented vs. used for personal reasons, but as John said that only applies if used for more than 14 days personally.

So if you rented for 225 days but used it personally 25 days, then your personal use is 1/10th and you can only deduct 90% of your business expenses.

PS - Not an accountant!

Just in case you were not aware, condotels and condos are not the same thing. A condo building is just a multi-family building with an HOA in charge of the common features. The HOA controls how the building is used and may even prevent STRs entirely, but usually if they allow STRs it is completely up to you how to manage them, including if you want to do it yourself and who you hire to clean them.

A condotel is a multifamily building where the HOA is basically a management company and they run the building like a hotel. You are usually limited to only using it personally for a few weeks, and you MUST use their management company for rentals, their cleaning company for cleaning, etc. They decide what to charge for those services and you cannot shop around. It's entirely different from a simple condo.

Lenders (and most investors!) HATE condotels. Condos have some issues but nothing close to condotels. They are completely different.

@Joshua Strickland Wondering if lenders look at income from a property before depreciation or after depreciation? If I push a lot of depreciation into the first few years I technically net out to zero or even a loss but am still pocketing a lot of income.

In other words does a lender look at $30K income with $40K depreciation as $30K income or $0 income?

Joe