Hi Kristen, I know this is an old post but this is something I am looking at now as we pursue a transaction with seller-financing with a view to refinance later on with a DSCR.

I bought it sight unseen as I viewed it as a small development project, did my due diligence up front and didn’t really care about the state of the house.There were 5 offers on the property to which I ended up knowing a few of the other bidders.

I have been considering building a treehouse on a parcel I own as high as I am able with a wrap around deck with 360 degree mountain views as my next project. 

I know a common equity investment would be subject to UBIT but since there is no back end upside I wasn't sure if the pref equity would be viewed as a loan?

I'd just make sure you have a VERY CLEAR SCOPE OF WORK no matter who you work with.If you decide to use someone besides your property manager, you need to have BOOTS ON THE GROUND that can view the property a couple of times a week at least! 

you can browse the forums and view other threads, i found these for example:Newbie New Build for STR Questionsbuild from scratch STR in my home vacation market?

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Per https://www.ci.richmond.ca.us/DocumentCenter/View/61839/MNOI...Fair return defined Kenneth Barr method (MNOI) which the Courts have agreed with:“as the price controls are not confiscatory; i.e, they do not deprive investorsof a fair return on their investment.”  

@Patrick Goswitz  from different point of view.

I was really interested in a 1/1 on top of a hill (had a bit of a view) but was several miles north of Hochatown, so was talked out of it by my realtor.