All Forum Posts by: Felix Piper

Curious how long would a lot split take in Los Angeles (city). Anyone know?

I plan on investing with some partners, mostly close friends and family. I will mostly manage most of the work: underwriting, rehab, rentals, etc. I have talked to several accountants and lawyers, and have received conflicting information. Do I need to set up a syndication for this or would a partnership under an LLC be ok? Can I have passive investors in an LLC? Most lawyers have said this is a security and I need a syndication, but most accountants say they set up LLCs that way all the time... I was also told that the LLC interest has to be divided based on the capital contribution and cannot be divided based on the work, for example it can't be a 50/50 partnership if one puts all the money and the other does all the work.

Any additional insight or leads would be helpful! Thank you in advance!
And if it matters, this is for CA.

I am almost ready to start the 3rd R in the BRRRR strategy. I bought a duplex and added an ADU that will soon be finished. I was living in one of the units during this time and plan to move out and rent the units. Here are some questions I have:

1) Is it better to refinance or to have hard money/private lenders put a 2nd lien on the property to serve as a down payment to be able to borrow 100% of my next project?

2) If I don't refinance, do I have to let my lender know I plan on renting the unit out? The original loan was an owner-occupied FHA loan.

3) I also plan to ask the lender to remove the mortgage insurance (FHA loan), since with the value add, I should have more than 20% equity. I have read different articles that state the insurance on FHA loans cannot be removed, but other articles that say you can remove it... obviously I'll find out when I call them, but curious what have been some experiences on this.

Thanks in advance for your help!

@Michael Plaks, thanks for the reply. I would say part of development is design, but I guess it doesn't matter what I think. Do you know if there have been any cases on this? Or clarification from the IRS?

@John Malone, let's assume yes, that there is only one owner and the owner is the one that is trying to qualify for REP.

Would an architect or engineer that works in the residential industry, such as designing ADUs, additions, custom homes, etc. qualify as a real estate professional in the eyes of the IRS?

Interested 

Thanks for the replies. So how long do u have to stay at the property until u could move out? Or as soon as u move out u have to refinance? If someone is house hacking every year, do u have to get a new loan everytime?

Whether FHA or conventional, what type of proof do you have to give that you will occupy a property to qualify for owner-occupied loans? If someone were to purchase a multi-family property (2 - 4 units) with the intention of living in one of the units, would that qualify for owner-occupied loans? What happens if they don't end up living there?

When looking into purchasing a rental property, do most of you look at pre- or post-tax cash flow? Looking at a few properties in Los Angeles county and very difficult to cash flow pre-tax, so was wondering how they sell for so much. Is it purely an appreciation investment? Or do you consider mortgage interest, property tax, and depreciation deductions when calculating cash flow?