All Forum Posts by: Mike Leng

I (and my family) have more experience renting STR as a customer than as the owner, and I can attest to the fact that king is preferable to queen, but twin is preferable to double. The main reason is that more and more people (not just in my family but generally in US) suffer from insomnia or apnea or other sleep disorders, so that a married couple may actually prefer to sleep in 2 separate beds. Therefore, as the STR owner, I recommend you either put in a king when a couple can sleep comfortably together, or 2 twins. Basically, that's what the cruise ship industry has been doing for decades.

My new STR property is owned by a multi-member LLC (consisting of my family members). It's my first STR and first LLC. No income this year, but did have expenses, so I want to capture the loss and carry it to 2021. I am wondering if I can save some money and just do the tax myself by using TurboTax Business, especially because it's the first year of LLC with only a couple of expense items? Anybody has done the 1065 form themselves and can share with me the pros and cons?

Paul, maybe I am confused, but what do you mean by "operating cycle is 12 months"? Are you talking about the LLC fiscal year being different from the calendar year? Do you mean the new LLC doesn't have to file 1065 form in 2020?

Hi, I just bought a STR property. It's owned by a multi-member LLC consists of my family members. The closing will be early next year and of course no income yet from the property. Obviously there is already expenses related to the house, such as house hunting trips and home inspection, and etc. When I do the tax return for the LLC for 2020, do I just carry forward the loss to 2021? Is there anything else I should do to ensure max tax advantage for 2021 when there will be (hopefully) considerable amount of income?

If this post needs to be under a different section of the forum, please let me know.  Thanks.

Check out Azlo bank. It's 100% online and zero fee. 

Is there any legal limit on the amount of surveillance the landlord is allowed to place around the house?  I guess the thermostat and water heater stuff is totally fine.  But if you set up video cameras (especially like Ring or others) that record both video and audio, I am sure you will capture a lot of activities and conversations of your tenants.  (1) Does different state have different laws governing this kind of things?  (2) Will the landlord have to tell the tenants about the presence of the cameras and ask them to sign a waiver to acknowledge that their movements/conversations may be recorded? 

Sofia,

very good point.  I definitely will look into that.

You brought up another thing that I have been wondering -- Weekly rental vs Airbnb. This may be a unique situation for VA Beach (and NC Outer banks) -- the rental properties are usually rented on a weekly basis in the summer, with all the rentals start and end on Saturdays. As I mentioned in my earlier posts, it creates a lot of logistical issues for cleaning the units, as well as traffic jam on the roads up and down the coast. I guess the benefit of doing it this way is to maximize the occupancy.

On the other hand, if I offer the property through Airbnb, the begin/end date can be any day of the week. One good cleaning crew can handle several properties if they don't need to be all cleaned at the same time.  However, the downside is that inevitably there will be "orphan days" between one vacation and the next.  I can require on Airbnb a minimum 7 day stay during the summer peak season, but it's still possible to end up with "orphan days" between customers.  

I am wondering if anybody on the BP forum had experiences dealing with that.  In high demand areas during peak season, what's the better rental strategy:  fixed length rentals or Airbnb?  

Taylor, thank you so much for the detailed analysis.  This is why I like BP forums.  :-)

To answer an earlier question from Amy and Cary, I am not treating this as a strict business deal. My wife and I have a sizeable nest egg saved and we are not comfortable leaving everything in mutual funds, so we want to diversify into real estate. It will also lay the foundation for us to live as "snow birds" when we retire in maybe 10 years. So we are not super-concerned about ROI or cash flow, as long as the rental income covers all the expenses. My back of the envelope math is following:

$600k upfront purchase (for simplicity sake, assuming no mortgage)

Expenses: $6k annual tax +$4k annual maintenance/upkeep +$3k annual utilities + $2k annual insurance for property and liability = $15k annual OPEX

Income: $1.5k per week in summer and $1.5k per month in winter (after deducting PM fee)

16 weeks in summer (assuming 80% occupancy rate, allowing me or my extended family to use it when it's not booked) and 3 months in winter (assuming 50% occupancy rate) = $28k total annual income

Gross profit = $13k

ROI = 2%

2% return will probably make most people run away screaming, but for me, it's not a bad deal.  2% is about the interest rate I can get from a long term CD, but I also get about $10k worth of usage out of the house which is not included in the calculation, nor is the potential appreciation.

In other words, for somebody like me whose primary objective is asset diversification, a house is a better choice than gold coins.  

Patti and Erick, thank you both for the input.  I will look into Atkinson.  I have also heard about Beach Pro and Sandbridge Blue.  But honestly, all of them have pretty bad reviews. 

It seems that most of the dissatisfaction comes from bad cleaning.  My guess is that when every house is turning over on the same day, it puts a lot of stress on the company to have a team of 100 amateur cleaners working like mad for only 4 hours a week.  I wish there is a way to fix this, but not sure how easy it is to change the business model.

I almost wish there is a way for me to hire my own cleaner, but let the PM company take care of the rest of the rental business.

John, good input.  Yes I will be open to self-manage as an alternative option.  In that case, I would need to get recommendation on a great cleaning service and handy-man service from those who are familiar with the local Sandbridge market.