According to our understanding:1) California does not recognize REP status, but we could claim it on our federal taxes, is this correct ?

Cash flow is definitely the biggest challenge; both in terms of finding properties to buy that cash flow with a loan on them and just company wide given interest rates and labor/material is up and, at least where I'm at in Jackson County, MO, taxes are way up too. 

I don't think it passed in either neighborhood, but lets you know where the sentiment is.There is no specific tax offset for new construction that I've ever heard of. 

How do you pay for the tax and insurance?

I can’t imagine the returns you would have to generate. 22% federal tax, plus 8% state tax, plus 10% penalty.

My strategy incorporates asset protection measures like LLCs, specific trusts as well as professional property management to spread risk and ensure quality operations.As well as using tax codes to my benfiitSection 179, IRC Section 162, Cost Segregation and Bonus Depreciation and later 1031 them out for larger projects. 

Sell, get the tax savings while you can.

- Look into if property taxes are reassessed after purchase.

The sum total of taxes of each of the 4 units will usually be higher than if it were apartments.

So if you buy a 5 bedroom house and rent the spare 4 bedrooms = you can still sell tax-free under the 121 (you just pay back depreciation) If you buy a duplex and rent 1/2 and live in 1/2.