SHOW NOTES & LESSONS

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Recommended Podcast Episode that is paired with this one like a Fine Wine:

Episode 034 - Creating Your SOP: How to Put Your Business on Autopilot

Get This Episode's Show Notes in a pdf form...

Go To Our Download Page 

Show Transcript

[00:01] Over the last two centuries, nearly 90 percent of the world's millionaires have created their wealth through real estate. Here to tell you how you can...

Bookkeeping is an integral part of a vacation rental business. This is because the government recognizes it as a business activity and levies income tax over the income earned by the owner. Companies like Airbnb, Booking.com, VRBO, and others have become very popular and more and more owners are using these platforms to earn attractive incomes from their properties. Here are some useful tips to save your hard-earned money from being charged as tax by the government.

Learn the 14-day Rule

You are not required to pay any tax on your income if it has been rented out for no more than 14 days in a given year. For this rule to apply, you must have lived in the same property for at least 14 days. However, be careful that you do not rent out your home for more than 14 days as otherwise, your income attracts income tax.

There are Some Exceptions Regarding Rooms

You cannot rent out one room in your property and hope to get exemption just because you continued to live in...

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SHOW NOTES & LESSONS

This is a traveling week for Michelle and it's also our first "Best of" Episode!

Listen and somewhere in the middle of this podcast, you'll hear Michelle give you a secret word to collect a special FREE GIFT on next week's all-new episode.  Thanks for being a loyal listener.  God Bless You!  Go and grow!

For Safety and Security:

01) Emergency Contact Card (Contact Information Sent by Email, Text, and Posted Clearly)

02) Fire Extinguisher (Right by the Stove)

03) First Aid Kit

04) Smoke Detector

05) Carbon Monoxide Detector

For Guest Comfort and Overall Happiness:

06) Super-Fast Wifi (Password Sent by Email, Text, and Posted Clearly)

07) Comfortable Mattress (Consumer Reports #2 Rated is only about $500-$700)

08) Smart Television (Plus Cable, if High End)

09) Bluetooth Speakers

10) Charging Stations

11) Smart Locks for Easy Entry (For You as much as Guests)

12) Climate Control Directions (Keep Your Guests Comfy)

13)...

SHOW NOTES & LESSONS

What Type of Things Go into an Addendum?

Title the Addendum to Link it to the Original Contract, Date, and attach to the original.  State effective dates and any additional payments (or state the fact that there are none).

Define everyone involved and what roles they play. Make it crystal clear who you are, what you do, and who your guests are and what part they play in your business.  Be clear in and make it understandable to those not in our business.

State clearly, in easy to understand language and using examples if possible, what each term is meant to do.  You may wish to restate things in your lease that are remaining the same and things you are adding to or taking away from that changes the original terms of the lease.  Terms usually add to your lease, like the fact that you won't be the main resident, but plan on using it to clarify what each party is responsible for and exactly what they have...

The comfort of your guests during their stay inside your vacation rental is paramount for the success of your business. Whether your property is in the US, the EU, or Canada, your AC or HVAC unit(s) needs to be working optimally to make it comfortable and convenient for your guests. This way you can not only keep guests happy but also keep a tab on your monthly energy bills.

Monthly Cleaning of Filters

Filters in air conditioners catch a lot of dust all the time form the environment. It is imperative to clean the filters of your air conditioners once a month to make sure that your air conditioning is working at an optimal level.  Because you may or may not be in your unit all the time, you need to come up with a way to remind yourself and your maintenance staff to change these filters every single month like clockwork.  If your STR is in your home, you can install thermostats with lights reminding you to change the filters.  This is especially necessary...

SHOW NOTES & LESSONS

OVER 5 MILLION PEOPLE HAVE LEFT CALIFORNIA NOW DUBBED "THE CALIFORNIA EXODUS"

Although people are moving into the state while others are moving out, Cali has still lost more than 1 million people and the population continues to shrink.

Who's moving in?

Those making $200,000 plus per year with higher education from tax-burdened states like New Jersey, New York, and Illinois (also seeing massive Exoduses).

Who's moving out?

Those making $55,000 and below with no college education.

Where are they moving to?

States with much more affordable housing like Texas, Arizona, Nevada, and Oregon.

CALIFORNIA HAS 5 OF THE TOP 10 MOST EXPENSIVE RENTAL MARKETS

What a One Bedroom Rents for in:

Los Angeles $2249 month

San Francisco $3400 month

Las Vegas $925 month

Phoenix $945 month

What a Two Bedroom Rents for in:

Los Angeles $3200 month

San Francisco $4500 month

Las Vegas $1122 month

Phoenix $1137 month

...

SHOW NOTES & LESSONS

COMPARE INCOMES FROM A SHORT TERM RENTAL TO A LONG TERM RENTAL

2 Bed/1 Bath

Long Term Rental

1 Year Lease

$1200 month

2 Bed/1 Bath

Short Term Rental

Daily Rate

$87 per night

82% occupancy

$2140.20 month

2 Bed/1 Bath

Short Term Rental

Airbnb's Weekly

10% Discount

$609 for 7 days

-$60.90 discount

$548.10 per week

rent out 3 times

$1644.30 per month

A Loss of $495.90 mo

or $5950.80 per year

2 Bed/1 Bath

Short Term Rental

Airbnb's Monthly 

28% Discount

$2610 for 30 days

-$730.80 discount

$1879.20 per mo

 100% occupancy for

$1879.20 per month

A Loss of $261.00 mo

or $3132 per year

Use Vacancy Instead

Short Term Rental

Our Monthly 

18% Discount

$2610 for 30 days

-$469.80 discount

$2140.20 per mo

Same as your original Single Day!

WHERE DO I FIND MY PER DAY RATE AND OCCUPANCY RATE?

If you've been a host more than a year, use last year's numbers.

If you haven't been a host for a year yet, then use...

SHOW NOTES & LESSONS

Forums are a Great Place to _____________.

A. Learn from other Hosts.

B. Bitch to and with other Hosts.

C. Learn from Guests' Experiences.

D. All the Above (Hint: This one!)

Nest is a great way to control your units when there's no one in them.

An AC unit works best when it's set no lower than 68 degrees.  Under that and you're asking for trouble because that's when units will start to freeze up, which could potentially harm your unit.

What is the definition of Host?

What is the definition of Guest?

Be a gracious host and allow your Guests to be comfortable.

A locked thermostat screams, "I don't care if you are comfortable!"

Stop the Madness!!

• No more War and Peace sized Rules
• No chore lists for Guests (they're not your kids!)
• No "fixing" the washers and toilets so they use less water (unless they are BUILT that way, ie. Energy Efficient)

You only need a few rules.  Here are mine:

01)  No Smoking

02)  No Pets

03) ...

Running a vacation rental business seems attractive and easy but it is not a cakewalk for most owners. You must be prepared to face stiff competition from not just hotels and hostels in your area but other vacation rental owners in attracting guests to your property. You must spruce up your property and provide amenities that appear attractive to potential guests.  

Here are some useful tips to keep in mind when launching your vacation rental business.

Use More Than One Platform

I use two platforms for my properties.  One is great in the west and the other is better in the southeast.  The success of your vacation rental business depends upon whether you can reach your target group of guests or not. By using different platforms, one at a time or more, you can make sure that your property becomes visible to all tourists coming to your area whenever they conduct a search online. In addition to listing your property on Airbnb and other short-term...

SHOW NOTES & LESSONS

Sole Proprietor vs LLC Liability

Issues for the Sole Proprietor or Single-Member LLC

Insurance to Cover Liabilities

Protecting Real Estate through Multiple LLCs 

How many rentals in each LLC?

Looking at the Big Picture

Estate Planning Issues

Protecting your Assets through a Trust

Every State Law is Different

Every Foreign Country Law is Different

Every State Taxing Authority has Different Rules and Regulations

Every Foreign Country has Different Tax Laws

Can a Trust own the LLC (or Corporation or Partnership)?

Understanding State and Foreign Country Probate Laws

Avoiding Probate with Trusts

USA Reporting Requirements for your Ownership of Foreign Real Estate

Get This Episode's Show Notes in a pdf form...

Go To Our Download Page 

Show Transcript

[00:01] Over the last two centuries, nearly 90 percent of the world's millionaires have created their wealth through real estate. Here to tell you how you can ride this wave...