Specifically; rules, regulations and permitting procedure.

For example, in my market, we see MF building permits way down for the last 2-3 years.

As long as the city considers your property a true SF, you shouldn't have any issues getting this permitted (in theory, yet to see how some municipalities will handle this law).

In 2024, the city instituted a CAP and for a period, now only active STR permits can transfer to a new owner.

The total cost including construction and permits (but excluding the land) comes to about $2.14 million.

I'll work with an attorney to assist with drafting that.Q2: Yes, I'll talk to my CPA but we'll most likely hold the property for at least 1 year under the LLC given our timeline to design, permit, build and sell the property, meaning I should avoid short-term capital gains.  

I read the permitting process and it seems somewhat strict.

They also are implementing a new STR permit for those in the county but not in the city.

Their permit will not be transferable when they sell though, according to the draft plan.

Since the yard is already rough, I would keep the shed and see how it works out.Consider adding something to the lease that permits you to remove it from the property if it becomes problematic.