All Forum Posts by: Joel Forsythe

@Shane Duncan

There’s truth to both what James mentioned as well as proper documentation. It’s highly unlikely any lawsuit will go so far as piercing your limited veil protections.

However, it's the simplest of downloadable loan template forms to simply document the parties, the amount, terms, duration etc. You might even go so far as an officer of the LLC to "personally guarantee" the loan, which makes a difference if bankruptcy ever got triggered. Put it in your LLC binder and move on. Beyond a law suit, the record of personal loan to you could matter if something happened to you; the company goes into bankruptcy or probate as a result, the registered loan paperwork may matter when proper reconciliation is worked through by a trustee.

Alan, not sure which element is confusing for you. It pretty straight forward in the language. If a residential property is bought and resold in 18 months or less, there will be a new required disclosure document included with all the other escrow documents. The licensed realtors will be all over it as a new legality. What will be required from the seller party is:

- Detailed scope of work of any/all additions, improvements, alterations, repairs, etc. All of them, everything.

- Names and contact information of all contractors associated with the scopes of work. It doesn’t explicitly state listing their license info, but you know that’s not a good thing if they don’t have one.

- Copies of all required permits pulled for the scopes of work. If copies are not possessed by the owners, contact info for the entity that pulled the permits.

The whole “As-Is” portion of the sale, is now really “As-Is according to the standard construction laws and implicit warranties per CA code”. The disclosure doc is now a road map of liability and warranty management for the new owner. If something bad happens, really bad, it’s a a road map for the new owners attorney. Make sure your GC or subs know their info is being legally documented at the point of sale from now on. They’ll love that……..

@Account Closed Hey, in my opinion running a construction company, I would go further than LLC, and go corp/s-corp.You need to get that Gen B license asap. Put miles of distance between yourself(individual) and the contracting entity as possible. You may even consider the investment holding LLC operate separately from the construction entity. It seems like many in CA are still unaware of what's coming this July, 2024, CA AB 968 goes into effect. If you are indicating purchasing and reselling a property with extensive work performed in a period of 18mos or less, the liability microscope and recorded documentation at point of sale is gonna separate pros and joes . It's great you want to be legit, but you need an arms length entity and run it that way to a "T" from now on.

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...

Hey Kevin,

Having remodeled and built in LA for a long time, yes you can find laundry set up damn near any place. Wise or unwise, the climate is not prohibitive except fully rain exposed. Finding the solution in tightly scaled dwellings is challenging, but it is what it is, urban density and smaller homes are what they are, creatively adapt.

Exteriors- is there attached carport or garage that can handle space for the units? Can it be cleaned up around that area? Is there a covered patio next to the house? Both need to have placement on the exterior walls of the home for any hope to keep plumbing costs manageable. It’s not worth it if you can’t imagine doing the laundry in crappy weather wherever it goes.

Interiors- countless remodels in cramped space where we set the stacked in a hallway dead end, or steal from closeting. But we face access from the hallway, it’s simply ergonomic- laundry comes from bedrooms, goes back to bedrooms. IMHO squeezing them into small bathrooms is worse. Kitchen design; can be blended in with cabinet designs for stackable, depth similar to full size fridge bulk; or side by side floor under counter, you gain large counter space with backing cabinet uppers.

Happy trails!

@Danny P.

I don’t know you jurisdiction, but in your scenario, it depends on if you have significant framing, structural alterations being performed. If not, and it’s mostly pull-and-replace type work, you may be able to have the licensed subs pull their own permits for their stand alone work each. Plumbers, electricians, HVAC, even tile if there is a need for it in your area. You should approach them and ask them to include a fee for adding the permits to their contracts.

In my area, that may not fly, as the full scope of work may require a “building” permit as opposed to individual trade permits. How and when you approach the city, and the scope of work, determines what may be possible permit wise.

Best case might be to hire a GC for all the rough and mechanical work, ask to complete finishes on your own, see if that flies for savings. Problem is, the building permit usually can’t be finaled until project is 100% complete, that leaves the GC on the liable hook thru completion.  Never worth it to me.  Good luck.

This sounds like a panel upgrade? Or just adding a gas line? This seems extremely minor in terms of architectural drawings that would have to be updated. Title 24 docs are very often prepared by a different entity, sub contract engineer etc, rather than the architect. See whose name is on the the Title 24 sheets that were approved.  Did you reimburse the Arch for title 24 service provider or did they create the forms? If sub contractor, you can absolutely contact them directly, and go over the changes, pay for new pages.

Ask the inspector if Title 24 sheets are enough. If he wants specific pages on the architectural to add notes about the added scope of work, get him to put that in writing and what pages. If the original architect won’t provide revised drawing sheets, you have no choice but to draft stand alone new drawing pages by another entity, labeled and identified as a field inspection requested revision, that only address the correction requested. If the original architect refuses to service revisions, you have every right to hire new documents from another entity with their own stamp of authorship. With something this minor, I’ve gone in with simple letter or tabloid tear sheets to add to permit set. If the original architect is too busy to add a mech note to an already saved draft file (gimme a break, I can do that in 10min) they aren’t coming after you in a legal dispute, because they refused to service you. If the architect did the title 24 themselves, just hire a new title 24 company, they are online everywhere.

@Brad S. I remodeled and built additions in NE LA, Pasadena, surroundings etc, over last 20 years. I've reviewed several modular approaches to ADU installations vs stick built. I would argue $150/sqft is not realistic here. I would also say that having any "system" that doesn't attempt to ascertain complete development costs, falls apart very quickly.

$150 would only be feasible converting existing structure to ADU. The hidden costs with new construction grading, mechanical, and foundations can blow that 150/sqft to 250 and up (hard cost) I dont know if you dug through many of the Western States existing modular companies, but I never saw much below 250/sqft with quality finishes (especially for a community like Pasadena would expect). I know for a fact I couldn't stick build and quality finish a stand alone 800sqft ADU in Pasadena for $150, and if there was a real solution at that price, we'd all be throwing them in and making bank off the markup.

Quote from @Alexander Straffin:

Hi All,

I am having a hard time executing my primary rental strategy with these mortgage rates, and I am exploring other opportunities.

I have recently been looking into buying land and dropping a pre-fab on a slab to get the feel for construction projects with the lowest risk possible.

I am curious if you have any recommended resources for getting started in development/construction projects specifically for real estate investment. I'm looking for any guidance I can get as I have been struggling a bit learning the ropes (not as easy as buying a condo and hiring a property manager) :).

Apologies if there are a ton of posts just like this one, but I couldn't seem to find a good starting point via search.

Thanks in advance!

- Alex

The significant challenge you will up against is accurately assessing your true development costs. The Modular/pre-fab offerings give you some relatively known costs to account for in one nice big chunk. However, assessing the acquisition + soft costs + required utility site prep + foundations is where the profitability of a spec build gets eaten alive.  A prefab may come with a complete plan package, but it may have to be slightly modified based on location. You will still need site planning and foundations plan check per local code. Then the huge variations in utility access and roughing the site costs to calculate. That’s just some rudimentary stuff, without potential zoning related hurdles that may exist.

Single specs, one-offs, need significant margins on the front side, then a lot of investigations and reliable estimations to come out on top at the end. Experienced GCs/Bulders often take on a solo site development, as there is some flexibility in controlling/modifying design and construction costs to hold the profit margin, but it’s not easy money by any means. So the less construction experience you have, you’ll need even more spec margin.

Quote from @Pal Sa:

I am thinking of building a shed in the backyard for rental purposes. I live in the bay area. If you are knowledgeable about various aspects I need to consider, please do share. The high-level plan is to build a cozy shed with space to sleep and work and have a mini kitchen and toilet and shower. It has its own entrance. Ideally, I would like to rent it out on a short-term basis and if allowed on a long-term basis. If I can't rent it out, I will use it for my personal purposes. This is not an ADU. I dont have the budget for building an ADU.

Is it feasible and possible?

Can a shed have a toilet and shower?

Approximately how much does this project cost? How is the permit process for sheds?

Has anyone done this in the bay area successfully? I am in San Mateo County. 

I am confused about parking. I might have to let them parking in the driveway and I park one of ours near the curb. How did you all solve the parking problem? Do short-term renters have a car? They do most likely. I live in a suburb and public transportation is not close by.  There is plenty of street parking.  I wonder if neighbors are going to resist. 

Do I need to get a separate internet connection or upgrade the existing one and share wifi?

Hey there. I’ve built and remodeled here in CA for a long time. Simply put, there has always been explicit codes in place for creating “habitable space/accessory structures”. Many local CA municipalities had various tweaks on what they can be, ie “rec rooms” etc. that could have a toilet and sink, but no shower, because…… they aren’t dumb, they have always known what an intended “sleeping-based occupancy” looks like. Now more than ever due to the statewide ADU clarifications, there are no gray areas really. What you explicitly are asking to do from a code compliance perspective does not exist as you were hoping might be possible from a “budget” minded concern. You will be required to meet full residential code compliance on any full-time occupancy, no matter what anyone wants to call it.

Any new habitable accessory structure on a lot, despite its size, will require full complete plans to modern code, foundations to finish.  Smaller does not equate to “cheap” in this context. Sorry.

Cloud based project management is a major resource as long as you have full team “buy in” participation. We also started using a platform called Basecamp way back when a handful started popping up as a retail cloud service. There are many now, but what I thought worked was finding the right level of simplicity, as not every employee or sub early on was that techno savvy or had the same ease of OS compatibility on their mobile devices. That’s changed a lot now, but having a singular space were ALL plans, organized discussions, documents, and photos etc, was a no brainer. We had a client portal added as well, and so practically and psychologically  , everything ran a million times better. Having an entire project run via separate emails/texts/voicemail with every single thing with every single member, is a mess and inefficient. 

Again, get inside a demo, this whole service background was started in IT for large office based teams for project management, and I went with a platform that had a little less software/spreadsheet feel, but more visually simplistic and intuitive. You should know it when you see it, what makes sense for your team. Do it and don’t look back.