All Forum Posts by: Cary Westerbeck

Since I’m an architect I did my own short plat in 2017-18 with the usual help from my surveyor and civil engineer. It takes about a year in many jurisdictions from start to finish. 

Heather, did you find help? I’m an architect in King County and I’ve done short plats, including one for my own property recently. They key consultants will be a surveyor and civil engineer typically. Feel free to message me if you want to chat. 

Bummer. Lending is so strange. 

Hi all, I was going to ask the same question re: hard money or private lenders on the eastside or Seattle. I have a fully entitled and permitted 4-unit apartment building project ready to build on land my wife and I own free and clear in downtown Bothell (which is booming). I'm an architect, small developer and general contractor transitioning into developing my own projects. We're free to start building literally tomorrow with all permits approved except we've been turned down by small local banks WA Fed and Banner since our personal income isn't high enough. Coastal Community bank is ready to offer us a commercial loan right now if we just had a co-signer with $300K liquidity, and we don't have friends or family to do this for us right now. So we're looking at private or HMLs now. @Nghi Le, @Stephanie P., and anyone else who wants to chime in with advice, do you have lenders you'd recommend we talk with for our construction loan? We have significant equity in the land, services and fees paid, etc. and our pro forma pencils. We will build and hold, living in one unit. We own a triplex on the lot next door. 

I would appreciate any tips or leads on lenders you'd recommend we contact. Thank you! 

Thanks @Dave Foster! This is the scenario I know best too. We've done both 1031 exchanges and also benefited from the $500K exemption as a married couple a few times when selling past primary residences. Many friends and family have done the build/buy and live for 2 years in the home then sell method, so that's in our list of possibilities as well.

My main question revolves around whether there are any tax consequences that we need to think about when taking possession of the third home, as Stanley mentioned above, i.e. whether our development company has to sell it to us as a private couple, and whether we're allowed to give ourselves a lower price without adding a markup, or gross up. Those are unknowns I still need to get settled. 

Really appreciate your comments and encouragement, it's so helpful. 

@Stanley Bronstein Thank you so much. This is really helpful. 

My first thought is always to buy or build and hold, not to sell at all. The backstory here is that I've designed, developed, and fully permitted and entitled a fourplex (3 apartments, 1 commercial space) for this property. We're currently in the construction financing phase and not sure if the project pencils out as it did a year ago. Construction costs have skyrocketed in 2018 and the DSCR is starting to look thin. So if we're granted financing we'd be able to start building literally tomorrow. However, I now have to take a big step back and figure out what other projects could pencil out better for this lot. Development is a big risk, and I'm feeling it! But I have options, and with my skill set I can save myself a lot of money designing and entitling a new project if absolutely necessary, which is why I started running numbers on the townhouse scheme. I would definitely build and hold them as rentals if it penciled out, but if it didn't I'd sell. The proforma for renting is pretty easy, but the build and sell is actually more tricky given the IRS issues....or maybe not!

Thank you Benjamin. I will ask my CPA for sure. I figured someone here on BP might have done this before and would have an experience with this situation. It almost seems too easy, so I want to be sure I'm not missing something. 

Hi there, newbie here with a question I haven't found in my searches on BP. 

I'm an architect, developer, and general contractor. I own a small lot free and clear in the downtown of our small city just outside Seattle, WA. I've been running the numbers on building three townhouses on the lot, selling two and keeping one to live in as a primary residence and as an asset. (We just short platted a larger lot, and own the triplex on the adjoining lot, freeing up the newly created lot for development). 

Does any one have experience with this? What I can't figure out is what the tax implications are for keeping the third unit, if any. Obviously if we sell the first two we pay the standard RE fees, ordinary income tax, etc. But how is the third unit evaluated by the IRS? We'd probably make enough money on the first two sales to offset our mortgage quite a bit on the unit we keep. Does anyone know if we get taxed on any portion of the unit we keep and live in? Or maybe it's just seen as building ourselves a home and there is no tax until we sell later, hopefully after 2+ years to avoid capital gains. I'm not sure how to evaluate what the implications are for keeping the third unit. 

Any insight is appreciated, thanks.