Rapid Fire Q&A Your STR Questions Answered | Part 1

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 oftentimes nervous to ask questions, right? We don't want to feel dumb or stupid or anything like that. 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 coming from you guys. If you you haven't tuned into our show before, make sure to check us out@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 term rental, 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 of our guests. We have a short time to make sure our home is clean for our next guest, so we will 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 during your stay. We hope you understand. And Jack'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 it really comes down to emotional support animal versus service animal. So if we're talking specifically about Airbnb, you are not allowed to 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 yes, Jack, unfortunately, that Airbnb owner did have the right to refuse you and your little puppet 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 missed 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 Hostaway sync with Google Vacation Rentals? I know Lodify does. So for those of you that aren't familiar, Lodify and Hostaway, these are two different PMS programs. We call them so Property soft property management software programs. And there are a, a ton of them out there. So 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 to the second part of the question. It says, also, can you charge your guests 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 up front. 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 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 that I'm currently leasing and doing the lease arbitrage model, they sort of just fell into my lap. And it's been over two years now 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, 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 to be in your lease. Sublease that property on Airbnb, for example, or to short term rental guests 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 sublease. I think the longer the lease the better. That way the owner doesn't decide to do it themselves or, 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 renewed. 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. 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 with. 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 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 or versus a passive business. Traditional long term rentals are passive, right? But an active business like run running a laundromat 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 and158 with Tom Wheelwright, that is Robert Kiyosaki's accountant. A lot of us have heard about Robert Kiyosaki, right? Wrote the Rich Dad, Poor dad and he runs Amazing, Amazing Company, a massive network of a lot of accountants. So great advice on that one. 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 advisor, but from what I understand, when we're charging hotel like services, our short term rentals can be classified as an active business. So in this question where it says providing a few K cups or snacks or K cups are like the Keurig 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, or check out some of our prior content. Next question. This comes from Seth Weinman. Hopefully I pronounced that right. Says, so far as I am aware, Airbnb does not allow you to set an age limit or age restriction to make a reservation. As long as you are 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 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's 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 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 Namrata. 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 nine to five and to get more time for my family. And 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 responsibilities, get back that time so we can spend it with the ones we love, 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 price 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. 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 those 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, 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 Namrata, 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. And until next time, I hope you have a fabulous week.