398. 4 Ways Your Short-Term Rental Occupancy Tax Can Go Wrong with Serena Verma

Tom (0:00)

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SPEAKER_2 (0:06)

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Tom (0:32)

Welcome to this week's episode of the Tax Smart REI Podcast. Today, we're joined with special guest Serena Verma, who started out as a biomedical software engineer, building medical robotics and then turned real estate investor in 2004, where she's accumulated a portfolio, including rental properties and rental arbitrage, and then also turned private lender. She founded Hostvisors, which does accounting, tech consulting, and analytics for short-term rental operators. Her newer company, Monterra Tax Audits, Occupancy Tax Bookings, by Bookings, catches channel and software setup errors, tracks rates across states and local jurisdictions, and then files and remits for hosts, property managers, and accounting firms. Its tagline is AI powered, human verified. So we're gonna be diving into all of this in just one minute. It's that time of the year again. The new year is right around the corner. If you've been listening to the podcast all year thinking I really need to get proactive about my tax strategy, then this is your moment. Because the truth is, you probably don't even know how much money you're leaving on the table. At Hall CPA, our team helps real estate investors and business owners save thousands of dollars through proactive year-round tax planning. Whether you're looking to optimize cost segregation, leverage the real estate professional status, or short-term rentals, or structure your investments for maximum tax efficiency, then we've got you covered. But here's the deal, spots for new clients are limited as we approach year-end. So if you want to lock in your strategy before tax filing hits, don't wait. Check out the link in the show notes to request a consultation and start working with our team before you miss another opportunity to keep more of what you earn. All right, and we're back. And Serena, thank you so much for joining us today. Kind of just kicking things off here. So you went from building surgical robotics and then into rental property investing.

Exactly how did that happen?

Serena Verma (2:15)

Well, it was the magic of meetup. So one day I walked into a meetup and there were a bunch of real estate investors. And at that point, I had purchased my very first primary residence. And I came out of that meetup just knowing that my life would never be the same.

And that property and rentals were going to be part of it. So I just saw a great tax advantage as well as, you know, an alternative to the investing I was already doing in stocks and public equities.

Tom (2:45)

And how did the engineering background, how did you leverage that or did you need to leverage that in the world of rental property investing?

Serena Verma (2:52)

Sure. I think engineering teaches you to be methodical and analytical and look at the numbers and make decisions based on facts and figures and, you know, less about emotions.

So it was a process of just kind of lining up things, you know, so that the things I was purchasing made sense. The numbers made sense for profitability.

And, you know, that these were properties that would...

I used a metric of 20% cash on cash at that time. And that was achievable due to the low interest rates in that environment. And then I got lucky with the, you know, well, I suppose I got lucky, but a lot of other people didn't. So I keep that in mind. But with the crash of 2008 through 2010, I was able to accumulate a large owned property portfolio. And that was because of, you know, the environment back then. And I just so happened to notice it and, you know, get involved with it, despite my engineering career, which was going on at the time. So at one point, I did take a break of around 18 months just to acquire property, as I recognized that the rents and the interest rates and, you know, everything that was going on was probably not going to repeat anytime soon.

So part of that strategy included buying in the IRA. So buying within my Roth IRA, buying within the traditional IRA and then converting it to Roth IRA. So that over the next 10 to 15 years now that it's been, those rents have gone straight into the retirement account. And so they're not taxable or they're tax deferred until the properties are sold, or rather until the retirement comes to fruition. So, yeah, so it's been great. You know, some properties that I purchased for $19,000, you know, back in the depression of the real estate market, you know, have appreciated tenfold. So now they're worth, you know, 250,000. So it's been a great experience.