The construction loan is eating up my profit.

After it’s fixed up expenses shouldn’t be eating up your cash flows as heavily.

Hi Bigger Pockets community!

My name is Crystal and I am a mid 20’s traveling nurse currently living in Los Angeles. I love my job but I’m looking long term and wanting to get into investing in real estate. Long s...

But at some point the costs of all the LLC's and insurance will far outweigh the benefits as it eats into profits and complexity.

Also, the risk of "disasters" coming up and eating your cash-flow is there regardless of a full gut rehab or not.

Chances are there is a leak somewhere, usually a toilet flapper.The thing that made this a no-brainer for us was several times tenants failed to report leaky toilets, and since we had no way to PROVE it was their leaky toilet that caused the entire high usage we ended up eating the bill. 

A lot of office building leases can be gross or modified gross so it's key to know what repairs or updates are needed because that can really eat into a property owner investors returns.

@Alexander RedaI have done more buy and hold and have never done a lease option but my thought would be if they don't end up buying the property, would you then have to get it ready for the next lease eating up the money you saved on the 5% for repairs.  

1) Look for a value add that can provide significant early return 2) Plan for it and eat the negative cash flow realizing that it is temporary 3) Look for below retail purchasesValue adds have never been easier to find due to the JADU/ADU CA regulations. 

If you avoid the time constraints of doing a safe harbor reverse by having the builder take down the lot and start construction on it with you having a contract for purchase of a completed property, then you'll be operating outside the Safe harbor and not using a QI as the EAT (exchange accommodating title holder .