Local Legislation: Do you keep a close eye on local regulations, especially around zoning and short-term rentals?

To do this, divide the cost based on the ratio of the fair market value (FMV) of each asset to the total FMV of the entire property at the time of purchase.If you are uncertain about the FMVs of the land and the buildings, you can alternatively allocate the cost based on their assessed values for property tax purposes.Source: IRS Publication 527 (Residential Rental Property)

The new legislation makes it illegal for cities to make 400 sqft granny flats illegal.

The guest has started to say she's uncertain about her stay even though I've told her we are open for business with no issues.  

Along with risks of natural disasters some areas of the country are also more litigious or even have more uncertain jury pools and that can also play into insurance pricing.

This gives you more flexibility and protection in uncertain economic times.Scaling: Once your investment is stabilized and your systems are running smoothly, start planning to scale.

Assembly Bill 1771, also known as the California Housing Speculation Act, aims to change real estate tax policy to discourage investors from quickly reselling properties like single-family homes.Under the proposed bill, an additional 25% tax would be imposed on the gain from the sale of a qualified asset (including homes) within three years of the previous sale.The tax reduction is dependent on the number of years passed since the initial purchase of the qualified asset, ranging from a 20% reduction for sales occurring between 3.01 to 4 years to a 100% reduction for sales occurring more than seven years after the initial purchase.The revenues generated by this tax increase would be deposited into the Speculation Recapture Community Reinvestment Fund, which aims to support affordable housing, local governments, schools, and infrastructure projects.The bill is introduced by Assembly Member Ward, and the proposed tax changes would take effect from January 1, 2023.Assembly Member Ward argues that short-term investors in the market, including fix and flip investors, contribute to rising housing prices, limiting opportunities for Californians to purchase homes.While the bill may discourage short-term speculative transactions, it is worth noting that California's tax laws still provide certain advantages for investors, including unlimited tax write-offs and depreciation benefits.The bill is subject to legislative approval, and Assembly Member Ward will speak publicly about the bill at the San Diego County Administration Center on a specified date.Please note that this is a simplified summary of the bill and its potential impact on fix and flip investors.

Further legislation continues to impact residential RE investments.  

I strongly believe that legislation should be introduced to prohibit property wholesaling and also prevent double closings unless it can be demonstrated that the property's value has been substantially improved.  

Section 1245 recapture is calculated at ordinary tax rates, which leads us to recommend holding the property for at least four years when considering a cost segregation study.When a property is sold, the fair market value of Section 1245 property may be uncertain.