Sounds like you put in a ton of work to maximize the value, and that basement addition was a smart move.I noticed you mentioned the NYC luxury tax and some of the rental pricing challenges—have you considered expanding your portfolio in markets where you don’t have to deal with those kinds of headaches?

Be prepared to come in with additional cash to close due the the appraisal.   

There are also additional costs of operating and maintaining an LLC, like separate bank accounts, annual report filings, tax filings, etc.2.

The hard money 10% plus additional thousands in closing costs was too much to swallow. 

At the end of the day; you need more money to do something like this.MAX LTV on new builds is 80% LTC, Meaning if the build is $550,000 and Land is XAdd ($550,000 + x ) * .8 = LOAN AMOUNTYou would need to come in with MINIMUM 20% of the cost in addition to closing costs and reserves, $80,000 is not going to cut it for this project.

I was interested in something like owning a rental property as a way to generate some additional income. 

I'll just add that in addition to offsetting future tax liability, I'd like to offset current taxes as well, during my highest earning years. 

If you have equity and decent credit, a conventional Fannie Mae HomeStyle (or the Freddie Mac version) would likely be the better option instead of an FHA 203k loan (which will require a 3rd party HUD consultant to oversee the deal in addition to having the contractor involved). 

From a tax standpoint, there are additional disclosures to make when selling a business asset for less than fair market value to a related third party. 

Additionally, I created MEC (Material Estimator Calculator), a unique residential renovation software that automatically calculates a bill of materials (BOM) based on the property’s condition.Overall, I’m thrilled to escape the Seattle rain and connect with fellow investors here in Arizona.