Rapid Fire Q&A: Your STR Questions Answered

welcome back to the show there is no such thing as a dumb question right we heard this a lot growing up in our schools but I know that we're still often times nervous to ask questions right we don't want to feel dumb or stupid or anything like that uh luckily with YouTube and with all the social media out there there's a little less pressure to answer questions and so we get a lot coming in and so I want to take a moment today to answer some

of those great questions from you guys uh if you haven't tuned into our show before make sure to check us out at Str riches.com you can see all of our prior episodes there you can also see our videos if you're not catching this on YouTube or you can catch our podcast there subscribe to whichever Channel you prefer so let's go ahead and jump into it the first question we've got coming from Jack he says I have a service animal and in Texas the owner at the

Airbnb where he stayed or short terminal said while we love our four-legged friends we do not allow pets in our home we have a strict policy to ensure our home is in perfect condition for all our guests we have a short time to make sure our home is clean for our next guests so we'll likely need to hire additional help to take care of any pet hair left behind also we try to make sure all of our guests with pet allergies are taken care of we'd

kindly appreciate it if you can make other arrangements for your pup during your stay we hope you understand and ja's asking can an owner actually do that so this is in Texas and the answer is it depends so as we know real estate and landlord laws are different in every state and of course they're different in other countries if you're tuning in from outside the US but in the US really comes down to emotional support animal versus service animal so if we're talking specifically about Airbnb

you are not allowed to deny a service animal but you are allowed to deny an emotional support animal or Esa as it's often referred to except if you are in States like California or New York and that's at the time of this recording so it's possible those rules could be changed again this is according to airbnb's policies they're very strict with these types of things so uh yes Jack unfortunately that Airbnb owner did have the right to refuse you and your little pup for that stay

the next question comes from one of our viewers from YouTube and it's all about Google vacation rentals so if you miss that episode go back and check that out Google vacation rentals is making their way into the short-term rental space the question is first of all I says thank you for the video does hostway sync with Google vacation rentals I know lodifilms programs we call them so property sof property management software programs and they there are a ton of them out there this something you can

check really easily when you decide to use a property management software just be careful though as we know property management software programs might integrate partially with an OTA like Google vacation rentals or like Airbnb but there may be some things that it cannot do so that actually leads me in the second part of the question says also can you charge your guest by the month or does it make you charge them all up front before they move in we do monthly rentals they say so Google

vacation rentals is basically just another advertising Avenue to lead people to book directly with you so it really comes down to what you want to do I recommend charging upfront that's what we do with all of our rentals but this all comes down to the way you want to handle your listings it's basically another advertising site to help you get a little more exposure so I think that's pretty cool next question comes from Sean Burkholder he says I have a question in the video you mentioned

Leasing and an apartment and doing Airbnb with that is there a specific criteria you like to see before leasing an apartment in that way so what Sean's referring to is lease Arbitrage and now while I like to invest that's my main gig that's what I where I started and that's what I continue to do and I've built a pretty good portfolio as most of you know I do have some properties that I'm currently Leasing and doing the lease Arbitrage model they sort of just fell into

my lap and it's been over 2 years now since since my team and I have been managing those they've done really well and so we've done a few episodes on that for those of you that aren't familiar with lease Arbitrage you can go back and check out the episode 72 uh episode 71 and episode 103 so we've talked about that quite a bit but that's basically when someone leases a property they have the right so this has be in your lease to sublease that property on

Airbnb for example or to short-term guess and then make the difference so for me that's worked out really well and we talk about the specific terms in those prior episodes but I'll just give you the highlights the things that you want to make sure is that your lease says you can in fact subase I think the longer the lease the better that way the owner doesn't decide to do it themselves or you don't buy all the furniture and realize that you can't do it after year

one because whatever happens with the lease they don't get it nude so you definitely want to be careful with this I would say that it's risky but one of the things a lot of people like is you don't have a down payment to buy the actual property but remember you're also not building Equity too so it's not really a true investment uh it's a way to generate great cash flow it's a way to learn the short-term rental world but at the end of the day we

want to be building some Equity we want people to be paying down our properties for us right that's the name of the game so check out those prior episodes 7 71 72 and 103 if you miss those and we go into lease Arbitrage in more detail another question from our YouTube channel question says is providing a few K Cups and a few snacks considered an active business so this is in regards to taxes and our taxes change when we have an active business versus a passive

business traditional long-term rentals are passive right but an active business like run running a laundry mat for example these have slightly different tax consequences I am not the expert I am not a CPA but we have had excellent advice on the show you can go back and check out episode 157 and 158 with Tom wheelright that is Robert kiyosaki's accountant a lot of us have heard about Robert kosaki right wrote The Rich Dad Poor Dad and he runs an amazing amazing company a massive network of

a lot of accountants so great advice on that one uh if if you head over to our website you'll also see that we have some free recommended resources and in there we have a webinar with my CPA and she goes in depth it's recorded webinar totally free you can check it out and she talks about the difference between active and passive and what's considered active and passive and just some things that we need to be weary of with our short-term rentals so I am not a

tax adviser but from what I understand when we're charging Hotel like Serv are short-term rentals can be classified as an active business so in this question where it says providing a few K cups or snacks so K cups are like the kir coffee cups if you're not actually charging from those for those then I would say no but make sure to check with your tax advisor or check out uh some of our prior content next question this comes from Seth wenman hopefully I pronounced that right

says so far as I am aware Airbnb does not not allow you to set an age limit or age restriction to make a reservation as long as you at least 18 years of age and provide a valid ID you can book an Airbnb is this in fact the case on VRBO and booking.com I have an age restriction set to 25 but apparently on Airbnb it's just 18 yes Seth this is the reality um we have in our house rules and I recommend you might want to

do this as well to where it says our minimum age for most of our booking sites like VRBO and booking.com where we're allowed to set a minimum age our minimum age is 23 but what we do on Airbnb is we have a rule in our house rules that says if you're younger than 23 please notify Us in advance of your reservation so again this can't be enforced with Airbnb but at least it it's something that our potential guests are seen and a lot of times they

will reach out just to clarify yes I'm 22 but I'm coming to visit my mom who I haven't seen in a year I've been at college or whatever it happens to be so it can't hurt to ask doesn't mean that everyone's going to answer it but it is one little tip that you could do to include it in your rental agreement so our big worry with minimum ages is that you know they might not take care of our property and they might damage it so of

course we want to make sure that we have the proper protection for our property in case that does happen we want to have security cameras on the exterior to make sure they don't show up with a whole bunch of people or pets when we don't allow pets but we need to make sure that our house rules are really well defined what's allowed and what's not allowed next question comes from namada hopefully I'm pronouncing that one right she says I live in Seattle I'm a physician I

have two young kids I need to invest to quit my 9 to-5 and to get more time for my family this is one of the amazing things about real estate right that's why I got into real estate a long long time ago and that's why a lot of us do we can set up all these systems including with our short-term rentals passive systems where we can remove or Outsource most of the responsibilities get back that time so we can spend it with the ones we love

uh our friends and experiencing the world so she says biggest question which Market to invest in in this High interest rate will earn the highest COC return so COC that's cash on cash so this is the question of the day I mean this is a tough one and this is the the most common question that we always get so I can just give some basic guidelines around this and my personal opinion so I would say in this current market that affordable markets are going to be

some of those that are going to outperform the more expensive markets like Seattle Los Angeles Miami those types of markets because more people are moving to those markets so we have a higher demand going to these places like Florida like Texas like Tennessee uh of course within each of these states there's going to be cities that are much more affordable than others but affordability is driving people into markets and if you're entering into affordable Market well then that means your purchase price is going to be

lower as well right generally speaking and so if we can acquire property at a lower price in a place that's getting more demand which will drive up rents then that means our cash on cash return should essentially be higher right now we have to be careful with this so the places that I just mentioned for example Texas Florida tons of great markets here but we also have changing expenses so if you've got properties in Florida well then you might have come across a much higher insurance

bill recently than you did in the near past and if you're in Texas well you might be paying much higher property tax than you did in the near past so we just did an episode actually on property tax and a little bit on short-term rental tax that's episode 192 if you missed that go back and check it out because you might be able to save a little bit on your property tax so I would say namada really the affordable markets they're going to have lower acquisition

prices and if we choose the right ones then we're going to have more demand going there which should boost our rents and should boost our returns we got to be careful that we're not getting into a market that has much higher expenses than it did recently so that would be my answer in a nutshell but this is a tough one to answer if you think you found the affordable Market well the best thing to do is just run potential numbers run potential cash flow numbers and

compare that with another Market that's going to help you make a decision so I hope you found this episode helpful a little insightful if you've been enjoying the show I would really appreciate it if you wouldn't mind heading over to iTunes or Spotify or if you're watching this on YouTube just leaving us a like leaving us a comment subscribing uh and until next time I hope you have a fabulous week