Keep detailed records of income, expenses, and improvements, and choose the right filing approach based on your comfort level with these rules.This post does not create a CPA-Client relationship.

I’d love to hear your thoughts on whether this approach makes sense or if there are other strategies you’d recommend to optimize profitability.Thanks in advance for your advice! 

The numbers may be 30-40% lower than today's cost, but the process/approach to estimating may be good for you to review.

While I’m still in the early stages, I’m incredibly motivated to learn, grow, and surround myself with like-minded individuals who can help guide me along the way.What drew me to real estate is that I saw it as the best route for me and family to have financial freedom.

I think any seller without much knowledge of being the lender would appreciate the added benefits and hassle free approach using a third party.

Additional Info —Key Details:Location: Outside Santa Fe, NMProperty Size: 20 acres (valued at $80,000)Project: Two new STR unitsExisting Experience: Family has two fully-occupied LTRs nearby, generating $2,000/monthConstruction Approach: Self-contracted with licensed trades for electrical/plumbingCost Assumption: $80,000 per unit, plus ~20% for inflation (based on 5–8-year-old build costs)Financing: Using land equity as down payment on construction loan (expecting closing costs to be major expense)Request: Looking for feedback, potential pitfalls, and general guidance

The deal itself seems like an incredible opportunity for the right buyer,  penciling at a 9 CAP. 

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

Hi @Christopher J Driscoll I am doing something quite similar to your approach, my ADU permit should be approved quite soon, I am still waiting on my last LADWP clearance.

Being 3 units, the valuation will come from comps not from cap rate/ income based approach.