Numbers Don't Lie

📈 New Year, New Me Spreadsheets. Is there anything more fun than putting your books together after popping bottles🍾to ring in the New Year? Yes, most anything. We're finalizing our expense reports, mileage logs, and everything else to lock in our 2022 financials. If you have a favorite tip, template, or pre-spreadsheet compiling meditation to get this done, send it our way.

🎧 Listen

This week's Listen comes from the Tax Smart Real Estate Investors Podcast. (28 minute podcast episode)

The subject matter itself may cause involuntary shuddering, but they answer some juicy tax questions in this episode. Do I need to treat my short-term rental differently from my long-term rentals? Can anything be done in 2023 to impact my 2022 tax year? Is bonus depreciation going away?

One of the more interesting techniques they discuss is cost segregation. Per the podcast hosts, "cost segregation is a tax strategy that allows real estate owners to utilize accelerated depreciation deductions to increase cash flow, and reduce the federal and state income taxes they pay on their rental income." Basically, you break out the parts of a house and whatever you can depreciate and deduct on a faster timetable, you do.

📽 Watch

This week's Watch comes from YouTubers Kristen and Michael. (18 minute video)

If only we could get fewer chicken little apocalyptic prediction videos and more actual information from the internet, the world would be a better place. In this video, the hosts go through their actual numbers from their first year hosting an STR. What's great is the numbers aren't crazy pie in the sky figures and they're forthright about ways they hope to improve in year two.

Here are a few of the key take aways:

• They were able to bring in $42,142 at their Joshua Tree property;

• Their house was able to compete in the market even though they didn't drop the cash up front to install a hot tub in an area with a lot of hot tubs (you can revisit our previous hot tub discussion here); and

• There's no avoiding bad guests, but you can protect yourself by checking out potential guests' reviews, setting up your house in a way that doesn't encourage parties, and designing your space for the guest you want to book.

📖 Read

This week's Read comes from Patrick S. Duffy's article via US News & World Report. (12 minute read)Do you know what's better than an article with editorial insights supported by a deep dives into the underlying data? One that cites its sources like this one does.

If you're tired of the doom and gloom peddlers as well as the "there's nothing to see here" crowd, you'll find this article refreshing.

Here's a key excerpt specifically relevant for short-term rentals:

One point that article identifies is the recent internet uproar over cleaning fees and checkout lists. Whether booking through an online travel agent (OTA) or just word of mouth to stay at the same beach house your family has stayed at for the last 20 years, there have always been house rules. I think much of the pushback is because 1) it's easy to hop on a social media complain train 🚂 and 2) there are plenty of STR hosts that shouldn't be. Driving some of the get rich quick crowd away from STR ownership wouldn't be the worst thing in the world.

☘ Potluck

They have been saying the world is going to end every year since I was a little girl in Kentucky. - Nannie Murphy aka my grandma, age 80

Click on one link forecasting a market crash and you're in for a week's worth of algorithms trying to push doomsday down your throat.The above quote is real and it's one of my favorites for providing perspective. Although the market could crash and we could be in for a major recession, a lot of the loudest voices saying so aren't doing it from a position based on fact. It reminds me a lot of the end of times believers my grandma was referencing after 9/11.

To look through a non-real estate lens at the doomsayer phenomenon, you should check out this throwback NPR article from Barbara Bradley Hagerty with All Things Considered in 2011. (7 minute listen or read)

So much of what we consume on social media is done on faith in the content creator (there's a metaphor there someone can work out) with little substance to back it up. Whether online commenters ascribe to the religion of "the market crash is coming" or "stocks will always go up," it's important to weed through the noise and set emotion aside when examining your deals. If a creator seems like they want you to root for their team rather than understand an issue, your Spidey-sense🕷 should start tingling.

That's it. Whether this is hitting your inbox on the original publication date or you stumbled upon it days, months, or years later, you're now part of STR Recap history.

Thank you for letting us share the STR journey with you. Please let us know if there is anything you would like to learn more about from this edition or anything you would like to see in the next edition. Until then, keep moving forward.

p.s. If you have someone in your life that has a short-term rental, is interested in short-term rentals, or you think could just use some extra homework, please forward this email their way. That is the best thank you we can ask for.

p.p.s. Founder of the Hustle newsletter enterprise and podcast host Sam Parr recently said he would try anything advertised as "World Greatest." So, our official unofficial tagline for the newsletter is now the World's Greatest Short-Term Rental Weekly Newsletter published on Fridays at 10:30 AM EST. I'll let you know when he subscribes.