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All Forum Posts by: John Carbone

John Carbone has started 38 posts and replied 1080 times.

Post: Schedule E - filing as non-passive income

John CarbonePosted
  • Rental Property Investor
  • Gatlinburg
  • Posts 1,091
  • Votes 957
Quote from @Nancy Bachety:

Self managing from a remote distance is the definition of material participation. Unless you don’t self-manage or you rely on property managers to do your work. Doing this work is exactly what qualifies you for materially participation. 

How many different cleaners do you have? How do you document your time working on it for 100 hours?

Post: Schedule E - filing as non-passive income

John CarbonePosted
  • Rental Property Investor
  • Gatlinburg
  • Posts 1,091
  • Votes 957
Quote from @Nancy Bachety:

It’s schedule E unless you provide services like cooking breakfasts ( think old school b and b’s). It’s not really open to interpretation, it’s pretty cut and dry. Most of us use schedule E, don’t provide substantial services, and qualify for material participation. Whether hosts know it or not, this is how a cpa would process it.
But I’m not a cpa, I just trust and verify. No doubt your savvy CPA will understand it once he reads up on it. No need to replace her/him. 

To qualify for deductions against W-2 though you need to actually materially participate. Just self managing from a remote distance will not normally qualify and this is where people get tripped up on it. 

Post: Schedule E - filing as non-passive income

John CarbonePosted
  • Rental Property Investor
  • Gatlinburg
  • Posts 1,091
  • Votes 957

My understanding is it goes on schedule E still but you can deduct against W-2 income if you qualify as material participation. In essence you get the benefits of schedule C filing, but still being able to file on schedule E provided you do not provide substantial services.

Perhaps a CPA can confirm, I have an accounting degree but I’m not a practicing CPA, it’s just my interpretation 

Post: How are everyone's STRs doing right now?

John CarbonePosted
  • Rental Property Investor
  • Gatlinburg
  • Posts 1,091
  • Votes 957
Quote from @Neil Doldo:
Quote from @John Carbone:
Quote from @Neil Doldo:
Quote from @Pete Galyon:
Quote from @Mark S.:

@Pete Galyon You are probably the only owner in Pigeon Forge/Gatlinburg running at 80-90%. I own in that area and know many other owners and no one is running at that level. What is your approach to drive that occupancy rate? Thanks


 Hey Mark. No, not by a long shot. MANY of our clients are still fully booked for the most part and getting in to do maintenance is the biggest issue thus far this year. Honestly the things that the clients had done ON THE FRONT END are  SO important. Getting a property that stands out with a feature like an incredible view or water of some sort. THIS HAS BEEN HUGE!! Once find that right property we do an analysis of the property and what is wrong with the property as a whole and make a budget for it. This will dictate how we offer and how much do diligence is needed to prevent and unforeseen cost that could destroy the cash flow model. Also, the quality of the furnishings, presentation and finishes are super important. The details  


 I agree with Pete.  My wife and I own three in the BR market and all have performed very well.  The key is setting yourself apart with your amenities.  Funny, our cabin with a view (spectacular, top 5%) is actually our lowest performing, doing $113k gross for 2022.  Our others are big, sleeping 16 and 19 respectively and have amenities like movie theaters, arcades, pools, hot tubs etc.  I'm not saying you need all of these to be successful, but the more you can do to standout will separate you from the rest.  My wife is a real estate agent in the area and helps investors find the right property.  She has to steer alot of people away from the standard cabin in the woods.  If you're looking for cash-flow, these just won't cut it anymore

Interesting you mention that the one with the view is your lowest performer, but then you say cabin the woods won’t cut it. Please elaborate 
Hi John, I mean the run-of-mill log cabin doesn't work any more in this market.  There is alot of competition and renters want high end amenities.  Our house with a view is a little more remote, and and feels more like a cozy cabin and less luxurious.  We still have a large theater room and a hot tub, so those amenities have been able to set us apart.  It still does very well and we bought before things got too crazy, but it is by far our lowest performer. 

Our other two have no view, but have a ton of extras that most don't.  One has a finished garage (with apartment over) that we converted into a 1100 sq.ft. mancave/arcade--three full size arcade machines, pool table, fooseball, air hockey, 70 in tv and lounge space.  We also have a separate theater room and hot tub. It is pretty remote as well (25 min to downtown), has no view, but grossed $143k last year.

The last one we just started in November, but it will easily be our top performer.  It has similar amenities as above but also a pool and is 7 min to downtown.  So far we have $95k on the books with the majority of the prime summer and fall still open.  We anticipate $200k gross this year.

My point is to make your property stand out.  Views and water are a great start, but there is more competiton now.  We have found making the house an experience for your guests has been very successful

Got it, makes sense to me. 3-5 years ago people could get by with just the view, but now it requires putting a lot of money into the place for guest experience. 

Post: How are everyone's STRs doing right now?

John CarbonePosted
  • Rental Property Investor
  • Gatlinburg
  • Posts 1,091
  • Votes 957
Quote from @Neil Doldo:
Quote from @Pete Galyon:
Quote from @Mark S.:

@Pete Galyon You are probably the only owner in Pigeon Forge/Gatlinburg running at 80-90%. I own in that area and know many other owners and no one is running at that level. What is your approach to drive that occupancy rate? Thanks


 Hey Mark. No, not by a long shot. MANY of our clients are still fully booked for the most part and getting in to do maintenance is the biggest issue thus far this year. Honestly the things that the clients had done ON THE FRONT END are  SO important. Getting a property that stands out with a feature like an incredible view or water of some sort. THIS HAS BEEN HUGE!! Once find that right property we do an analysis of the property and what is wrong with the property as a whole and make a budget for it. This will dictate how we offer and how much do diligence is needed to prevent and unforeseen cost that could destroy the cash flow model. Also, the quality of the furnishings, presentation and finishes are super important. The details  


 I agree with Pete.  My wife and I own three in the BR market and all have performed very well.  The key is setting yourself apart with your amenities.  Funny, our cabin with a view (spectacular, top 5%) is actually our lowest performing, doing $113k gross for 2022.  Our others are big, sleeping 16 and 19 respectively and have amenities like movie theaters, arcades, pools, hot tubs etc.  I'm not saying you need all of these to be successful, but the more you can do to standout will separate you from the rest.  My wife is a real estate agent in the area and helps investors find the right property.  She has to steer alot of people away from the standard cabin in the woods.  If you're looking for cash-flow, these just won't cut it anymore

Interesting you mention that the one with the view is your lowest performer, but then you say cabin the woods won’t cut it. Please elaborate 

Post: How do you control or treat odors between STR guests for quick turnovers?

John CarbonePosted
  • Rental Property Investor
  • Gatlinburg
  • Posts 1,091
  • Votes 957

The biggest problems I’ve had is the kitchen smelling horrible after a family makes a large breakfast shortly before checkout. Open up the windows blow an industrial fan with some febreeze has worked so far, but it takes a few hours. 

Post: How to keep guest from turning off power to ring camera

John CarbonePosted
  • Rental Property Investor
  • Gatlinburg
  • Posts 1,091
  • Votes 957
Quote from @John Underwood:
Quote from @John Carbone:
Quote from @John Underwood:

All of the switch guards that I could find were open on one side. My son found someone online to 3D print a fully enclosed switch cover for a few bucks each.

These makes it much harder for someone to turn off you ring floodlight camera.

My son got a 3D printer for Christmas so maybe he can make stuff like this for me in the future!

I’m having this issue, send one my way! 


 I had a couple spares but they are in the owners closet and it may be 2 or 3 weeks before I go back up.

My son is checking to see if he can get the CAD file to print some of these. 

You welcome to one of my spares if you can wait a few weeks.

Any update on this?

Post: Disappointed…but not deterred

John CarbonePosted
  • Rental Property Investor
  • Gatlinburg
  • Posts 1,091
  • Votes 957
Quote from @Wesley Thompson:
Quote from @Michael Baum:

That does suck @Wesley Thompson. Is there any recourse? I mean you spent time which is money. Can you get them to pony up cashola to pay for your time and energy?


 No, but if the current contract doesn't work out I won't be making the same deal with them. 


If the numbers still make it a great deal and it happens to fall through I’d still reconsider a similar offer. I know people tend to get caught up in emotions and do things on principle, but if your still going to get 150k on a 1m property and it becomes available you would only be hurting yourself on it. And honestly, you seem sincere about how your deal was going to work out well for the seller, but also because it was going to be making you a ton of money as well.  

Post: I am low on capital so I am going to become a master at deal analysis

John CarbonePosted
  • Rental Property Investor
  • Gatlinburg
  • Posts 1,091
  • Votes 957
Quote from @Sean Starkey:

I am low on capital so I am going to work on becoming really good at deal analysis. What do you all use to analyze short term rental deals? I have been using the short term shop calculator and it I like it but how do I calculate the first box to fill out which states Gross Monthly Operating Income? Is that ADR X 30 divided by average occupancy rate yearly? Just guessing! Please help and any advice for deal analysis period would help!

I think you’ll have trouble selling this service to someone, but shouldn’t get you down. I’d continue to look at deals you can’t afford and learn that way and do something else to make money as fast as possible so that when you have the money you will have experience for yourself 

Post: Disappointed…but not deterred

John CarbonePosted
  • Rental Property Investor
  • Gatlinburg
  • Posts 1,091
  • Votes 957

I wouldn’t worry about it, and you did the right thing by not being a backup offer. I agree with the handshake deal and feeling upset about the backing out. This stuff does happen often though. It sounds like a shady realtor who will justify their actions by looking out for their client to get them the maximum amount of money. don’t lose sleep over it, if it’s in the smokies and sold for a million now, it would Need to be bringing in 150k-200k last year in net revenues to lose sleep over, and if that’s the case, take several shots of whiskey.