Rick, I am preparing to convert a detached garage in Anaheim into 2 bedroom ADU.  

A few weeks ago I wrote a summary overview to our investors in both funds to prepare them for probably lower returns in the short run from potential higher defaults.

We’re sorry to hear that your experience fell short of your expectations, we value this opportunity to reflect and improve.We worked closely with you for over a year to prepare your property for success in the short-term rental market.

A lot of people will agree, but I did want to provide some context for counter arguments that people may have that you should be prepared for: 1.

@Joe BellevilleTo build a successful multifamily property portfolio in Grand Rapids, set criteria for property type, location, and budget, build a team, analyze deals using the 1% rule, leverage house hacking, leverage local knowledge, prepare for tenant management, network, and focus on long-term goals.

But once you declare to be running a trade or business - then 1099s do come with the territory.If you really want to avoid 1099s and decide to claim to NOT be running a trade or business - be prepared to lose your business overhead deductions upon an IRS audit.

Other distractions include non income-producing activities - aka any distraction pulling you to do something other than speaking with and following up with people.How can I prepare myself?

You are much better of preparing for the worst case scenario and adjusting your strategy accordingly.  

Be prepared with bank statements, leases, and operating agreements.Next StepsTiming: Wait until after January 19, 2025, to refinance and transfer ownership to avoid violating FHA rules.Consult Professionals: Speak with your lender, a tax advisor, and an attorney to confirm the implications of refinancing and transferring title.Prepare Documentation: Have your property appraised, ensure leases are up to date, and organize financial documents for your LLC.You’re on the right track with your plan, and a few strategic steps now can help you maximize the benefits of refinancing while avoiding complications.

I'm genuinely asking to understand the use case for my self for an individual investor.Re. balance, as someone who is a former CPA and has prepared financial statements for multi-billion $ funds, I understand the important of a balance sheet.