All Forum Posts by: Alex U.

Could a long term lease could be written as a series of short term leases (less than 30 days), and thus qualify income from the rental as "Active" and thus allow the tax filer to file as a "real estate professional"?

We are embarking on a construction project to build a 6 units onto a piece of land(30 yr fixed loan).  We have a few options to fund this, I was wondering what would be the best option and why?

1. Get a construction loan, ~10%, plus 2 pt, refi into commercial loan when built

2. Cash out refi 2 other properties residential properties, use the funds to build, keep original residential loan on land

3. 1031 1 or 2 properties to pay for construction.  I am not sure if 1031 funds can be used to pay for construction on already purchased land from over 12 months ago.

4. Is there another option?

I would post in your listing min credit score as well as min income (i.e. 2.8x rent etc).  This would allow you to be clear and avoid any potential risk of housing discrimination. If you are not getting quality inquires, it may be worth lowering the rent a tiny bit $50/$100 to acquire higher quality potential tenants with better scores and income.

How does one figure out what is a fair fee to pay architects? I am seeing ADU architects all charging about the same amount, but not really designing anything new. ADUs designs are fairly basic. An Designer/Architect has a dozen or so designs in their catalog. They ask you to pick the one you want. They take that plot in on a site map and charge roughly $12-16k per ADU. They run it through permitting etc. If you are doing multiple, they may charge around $7k/per adu for the same design.

Sure there is work involved, however, let's assume you pay the designer, $150/hour( at $16k, you would be at 106 hours). Plotting a design on a sitemap, and spending 4-8 hours with the client, for feedback, should be closer to $6k for an ADU.

Would like to hear what other folks are seeing?

For those of you who are building multi unit ADU developments, 6, 8,10, 12+ units. What sort of unit mix are you leaning towards?

For example 12 units, 6 x 1/1s, 4 x 2/2s, 2 studios.  What do you all recommend?  It feels like there is an overabundance of 400sq ft 1/1s, from what I am hearing, tenants don't stay in these too long. However, the $ rent / sq ft is the highest on these. 

Sample: 

Some San Diego Rental data from apartments.com.  This is through there operational reports section.  Does anyone else, have a rental data by zipcode source.

Cody, this is a great strategy akin to selling a naked put.  Curious, how many times you have ended up owning the asset that you lent on?

For your buy and hold properties, to my knowledge there are 2 predominant strategies.

1. Keep properties in your name or in a trust, get $1M worth of liability insurance for a few hundred dollars and rent out the units

2. Create a (Wyoming/NV/RI holding company), create a California LLC put properties into LLc. Keep primary in your trust. Put the holding company in the trust.

Option #1 avoids, the franchise fee in California $800/year, plus $20/month RA fee for Wyoming.

If someone has a couple of properties, what's the best way to operate?  Pros and Cons of each strategy.

NOI will determine valuation. My point is 4 plex in LV is at $2M...Im seeing 6 units in the same area for 2.2M....producing more income.

IF $/sqft on a 5-6 is better than a 4 plex, that should offset the financing hit on commercial, I would imagine?