All Forum Posts by: Luke J Nelsen

Last year in the Smokies we were targeting 30% cash on cash returns. Now with inflated prices and interest rates rising the returns have dipped into the teens for on market deals. I am still seeing 30%+ returns on off market deals we're analyzing. 

I agree with you. Don't get me wrong, I LOVE BP and appreciate all of the insight and the "FREE PHD" in real estate. However, I feel the content is not as insightful anymore and that the company is trying monetize everything. It seems it was built as an alternative it the big money guru business model but is slowly morphing into one. 

Hey BP Fam,

I just got off the phone with my CPA and it sound like me and my wife's effective tax rate will be upwards of 23%!! When I first started in real estate last, everyone made it sound like an incredible tax haven, etc. Unfortunately, I have not had that same experience first hand. I am being told that many of the tax benefits are not applicable if your income surpasses a certain threshold. My wife has a W2 and I am a 1099 real estate agent in WI. We own LTRs in Wisconsin and STRs in the Smokies near Pigeon Forge. We run all properties thru our LLC and I have a separate LLC for my realtor business.

Are there any CPAs that can weigh in on this? I want to make sure I am utilizing as many tax benefits as possible. And, maybe I am! But, would love to hear some of your tricks of the trade if you'd be willing to share.

Thanks,

Luke

@John T. Good call! Thank you!!

@Scott M. Agreed. We are adding it as we speak!

UPDATE: She has decided to break her lease and move out at the end of the month. The lease runs until 7-31-2022.

Unfortunately, we are now forced to fill a vacancy in November which is not ideal. There’s no specific language in the BP lease about returning the security deposit if tenant breaks the lease. But, if we don’t fill the vacancy right away November 1st we’re leaning towards keeping it. Thoughts on that?

@Aaron F. Thanks! We use the bigger pockets lease and the language is strong regarding this situation. So, we feel good about it. Just looking for the best plan of action to resolve it.

Hey Bigger Pockets Family!

We are landlords in southeastern Wisconsin. We have a tenant that is trying to add her boyfriend to the lease after she has already lived there for a few months. The boyfriend does not have a job, he’s a felon and she has already started forwarding his mail to her unit. He is currently in a halfway house/correction facility. She has basically asked us if he can move in November 1st and has already assumed it would be fine with us…

We are not comfortable with the situation and are trying to figure out what our options are. His current felony case has not cleared the court system yet but he does have a previous felony from last year he was found guilty of as well. One is involving evading the police and the other is for narcotics.

Any insights are greatly appreciate it!

Thanks,

Luke

@Kyle Smith I agree which is why we are scaling our business there. Our one little 3BR is knocking it our of the park so far. I am just weighing our options if it's wise to sell a steady asset for one that's a bit more of a risk but the reward is MUCH greater.

Hey BP team,

As a newer STR investor in the Smokies, I wanted to reach out to some veterans in this space. I own 2 Smoky Mountain cabins and potentially looking to do a 1031 exchange to buy a third. Currently we have 4 duplexes as well. We like the stability LTRs offer to offset some of the STR risk.

We enjoy the increased cash flow from the short term rentals but there inherently more risk. Especially with the risk of another “shut down”.

I was hoping to hear your opinions on this topic to see what you think? Will travel be slowed down? Will domestic travel boom even more? Will rural destinations take a hit or continue to surge in demand?

Thanks,

LN