All Forum Posts by: John Carbone

I'm probably the only one on Bigger Pockets on a Saturday night, but was reading Avery Carl's "Short Term Rental, Long Term Wealth" and my mind is churning as usual. I enjoy the book - it gives a great overview of the STR world and specific details on how to get started. I was hoping to see a roadmap on how to go from $100k invested on the 1st STR and the strategy on acquiring a 2nd STR and so forth. That's the part I'm struggling with. I keep reading how people snowball their investments in such a short amount of time, but I can't make the numbers work.

Based on the research I've done, a property purchased for $500k will generally cashflow $15k-25k in an ideal scenario (roughly 20% CoC). My question is how do most people make the jump to the 2nd STR property if you're generating $25k per year on the high end? It would take 4 years to save another $100k before I could make another purchase based solely on the cashflow. Are you cashing out the equity and using additional revenue streams to get the 2nd one? Seems there wouldn't be that much equity to be paid out after closing costs.

Thanks for the insight!

 Fed already mention inflation target is 2 % at eoy of 2024.

by that time rate ffr would reach 3% to match with the inflation target.

Awesome thanks for the info. Will ask about additional fees. If there are no other additional fees and the rate is truly 20% does that sound like a fair percentage? Even if it is do any of you all have any advice on negotiating a lower percentage? 

It’s not about the fees. It’s about building an actual business with your own customer base (and not what you lease from OTAs). Think diversified income, ability to market effectively, no risk of OTA algorithm changes that have negative impacts, etc 

Hey everyone, we are looking for some clarification or advice on maximizing the tax benefits on a short term rental. We are in the process of purchasing our first property, just narrowing it down right now. We both have full time jobs but plan to manage it ourselves to meet the requirements for material participation for it to be a non-passive property. We would also plan to run a cost segregation study to maximize bonus depreciation in the first year. How does this work to offset both the income of the property and then our W2 income? Are there other options or tax benefits we should look at? Does it make a difference on what we are able to deduct based off of a down payment, furnishing the property, and/or any maintenance/updating to the property?

Here is an example of some numbers I have looked at. If we purchase a property for $400,000 that has a gross income the first year (4 or 5 months before year end) of $25,000, operating expenses of $10,000, mortgage and taxes of $15,000, with a W2 income of $175,000, what might that look like for taxes? Do you take all of it in year one or does/can some of it carry over to the next year if unused? How does a down payment or other costs to get it going play into all of this? I have not been able to find a good example that actually shows how to offset both the income of the property and W2 income. I plan to talk to our CPA as well but want to have a better understanding of it beforehand.

Thanks in advance for the advice!

Thanks,

Chris

What have your experiences been with timeshares? Would you recommend others to partake in them?

PM charge as in property management fee? It is 20% that I mentioned.

I am trying to negotiate a better management commission fee for my short term rental. For a newly renovated ocean front condo they are wanting 20%. What would be the best way to negotiate down to 18% or lower?