All Forum Posts by: Rashid Khalil

@Rashid Khalil  and @Jon Fletcher Jenny Zhang has some great points above. Also, be sure to check the city, county and HOA to be sure a STR is allowed. Many do not.

In addition, keep in mind that just because you have or change to a STR, does not mean the depreciation can be used against your W2 income. It is not automatically an active investment. There is a lot of work required of an owner of a STR to qualify as materially participating in the management of that property. You have to put in at least 100 hours per year and more than anyone else who maintains that property. Next, you need to know that if you change from STR to LTR or vice versa, you will have to have your CPA/tax professional do a 3115 Change of Accounting form, which they hate doing, to switch from 39 year depreciation (STR) to 27.5 year (LTR). 

Hi @Rashid Khalil. I am in a similar position to you. I have W2 taxes that cannot be offset by my Long-Term Rentals ("LTR's"). Nor do I qualify for Real Estate Professional ("REP") status because of my W2. I recently purchased a Short-Term Rental ("STR"), which I will use to offset my W2 taxes with a Cost Segregation Study and Accelerated Depreciation. This is the only strategy that I am aware of that allows you to offset your W2 taxes.

It's harder and more expensive to get a short term rental up and going than you think it will be, and it is easier to manage once it is established than you think it will be. 

Other basic pieces of advice - do your own research. I like national parks bc there is a lot data on visitors. Lesser known places like New River Gorge, Mammoth Cave, Pictured Rocks National Lakeshore, Shenandoah, Acadia, etc. are going to outperform from a cash on cash, purchase price to annual gross rents standpoint.  Airdna, rabbu, and others are a useful tool but not to be relied on completely. Stalk airbnb and vrbo listings in the areas that you are looking...find other listings that have average to below average furnishings, pictures, etc. that are doing well. That was the best data point for me getting started. I bought a house just down the street from a place that looked like two college guys furnished it. And that house was booked up like crazy...we have since outperformed that property (feels better than it should to watch our calendar fill up before theirs). During the "holy crap, we're spending so much money, this better work" period, it is reassuring to have those comps to look at for encouragement. 

There's a lot more, but I'll stop at this. Launch your listing at the start or middle of peak travel season for wherever your property is located (likely summer). You'll get the new listing bump in search results for the first 30 days on the booking platforms. After those first 30 days in peak season, you'll have a fully booked calendar and will continue to show up well in search results, get a much needed cash injection, and launches you and you listing off with a great start and some momentum. 

Feel free to send me a message if you think that I can be helpful or if you want to talk in more detail. 

@Rashid Khalil

I own a few short term rentals myself in Tampa and think Tampa is a great market because of the consistently that is driven by the different types of tourism. Not only do we have beach tourism, we have educational tourism (one of the largest universities - USF and then UT), and also medical tourism (we have some of the best hospitals in the country especially for outpatient services

Jason - Austin city, understand its not STR friendly and have lot of restrictions from City regulations. Is that not the case?

There's a good chance property prices will still decrease in 2023, so there's a good chance you're paying more than you would if you waited 6-12 months. How would you feel if you bought this property and then the value dropped 10% next year?

Regardless, your returns are bad. I wouldn't touch it for cashflow and I certainly wouldn't buy it for appreciation unless you are OK with waiting ten years.