All Forum Posts by: Nick Boring

Hello BP! 

Here is a quick summary, my partner and I are in Southern California and we completed our first ADU project around 6 months ago. The project turned out great and we are looking to start our next one in the next couple of months. The first time around we used a conventional loan to purchase the property and then we used cash to build our two ADUs.

We are looking to take on a bigger project and will be needing a few different loans: Acquisition, Construction, Permanent. I think the best we can do is acquisition and then do some sort of construction to perm loan. In a perfect world we could find a lender that will work with ADUs that can bundle all these loans together to simplify our financing and save on some closing costs.

Here are a few more details. Acquisition will most likely be between $800k and $1Mil. Construction costs will be $600k to $1Mil depending on how big of a project we take on. Permitting time is around 6 months and construction will be 12 months.

Any advice on specific lenders or financing strategies would be appreciated! 

Thank you!

Dan thanks for the reply, that is great information. Were you ready to pay with cash or did you have some sort of financing lined up?

Is anyone in the BP community planning on participating in this auction in March? I would be interested to know why or why not you think this is a good way to find a deal. I have a vague understanding of the inherent risks involved when purchasing at a tax auction, the big one that I understand is the inability to perform due diligence to some extent. I also understand not all liens might be cleared and you may also acquire some very unhappy/uncooperative tenants. Does the county require all-cash or are their lenders brave enough to finance something like this? Seems like this niche should be left to the pros. Very curious to hear everyone's opinions, I have heard several people talk about it in the past two days alone. Thanks for the info!

Thank you for the info, it seems like there is no legal way to make this work then? I really want to stress that I would never do anything illegal, and even more so suggest a friend/client do something illegal. Is there a way to pay taxes on the rent for the previous three years to make up for not reporting the income, then classify it as a rental property? I am a real estate agent, but I am not acting as the agent in this transaction, they are simply a friend asking for advice, I probably should have used "friend" instead of "client". I will also make sure to say "please consult a CPA because I am not a tax professional". 

Often there is a fine line between just talking as friends verse talking as a RE agent. I do enjoy having these types of conversations with friends and family, so I will need to be diligent in what advice I offer. Eamonn McElroy, I do appreciate the advice about building a relationship with a local CPA to refer clients to, I should do definitely do this.

Hello BP and thanks in advance for your help!

From my understanding, secondary homes are not exempt from the capital gains tax, and if you are not renting it out then you cannot do a 1031. However, this client has had a relative living in it for the past 3 years (they have owned the property for 3 years), and the relative has been paying around $900 a month to live there. But my client has not been reporting the income as a rental property. Is there a legal way to turn this into a rental property so that they can save some money on the sale of the property?

I was thinking if they backdated a lease agreement with their family member and then planned to properly report the property on their taxes in early 2021 this might be enough? Let me know if you guys have any ideas!

Thank you.

I also meant to post this to the tax and legal forum, looks like it only got posted on the RE agent forum.

Hello BP and thanks in advance for your help! 

From my understanding, secondary homes are not exempt from the capital gains tax, and if you are not renting it out then you cannot do a 1031. However, this client has had a relative living in it for the past 3 years (they have owned the property for 3 years), and they have been paying around $900 a month to live there. But my client has not been reporting the income as a rental property though. Is there a legal way to turn this into a rental property so that they can save some money on the sale of the property?

I was thinking if they backdated a lease agreement with their family member and then planned to properly report the property on their taxes in early 2021 this might be enough? Let me know if you guys have any ideas!

Thank you.

I am closing on a house in a couple of weeks, it is owner-occupied and I want to rent out the master bedroom. I posted the master on Facebook and Craigslist in my area and got a lot of responses. Now that I have some interested people I want to find out the best and most professional way to handle the application, background check, and leasing process. Cozy came highly recommended by a close friend and it looks like they would be perfect for this, but they are not accepting new accounts because they are merging with apartments.com. Apartments.com will not let me list a single bedroom within a house on their website. I am stubborn and called a couple of times but both times they said I cannot list a single room. 

I am hoping to find a website that will handle:

• automated monthly payments
• background checks
• leases and applications

Any help will be much appreciated, I am really hoping to get the room secured with a tenant before I move in so that I can start my house hack! 

Thank you,

Nick Boring

Hmm, I do not want to be too polarizing. Maybe nickbrealty would be fine? Then I could just use TheBoringAgent or TheBoringRealtor as catchphrase or icebreaker.

Matthew, my SO likes TheBoringRealtor a lot. That would have been a great name :)