Need advice! Hit a roadblock as a new investor.

[Sean Anderson]

So I was a bit naive with my first investment overspent. Bought a 815 sq ft 2/1 1950s in a great area back in 2017 (still primary home) with the idea of fixing it up. I went a bit overboard, but market helped and I’m sitting on about 120k plus in equity, but spent 70k on reno.

I refinanced during covid and took about 20k for my next project with hopes of building an ADU in the back.

I needed more capital so did a home equity agreement for another 25k and took out a personal loan/home renovation during covid 70k 20 yrs 7.5 percent.

I'm currently under construction and owner builder 400 sq ft loft style detached ADU which will be either an AirBNB or long term rental. 300 1st and 100 2nd. It was designed to resemble clock tower because I like doing different.

It’s costing about 125k to build  that includes upgraded septic system, paver drive, and covered deck patio. I’m estimating final appraisal at 450k + at 1220 sq ft or $368 a sq foot for both units.

Problem is I can access the equity without losing my 3 percent rate and can't HELOC because of the equity agreement in 2nd position.

I’m really creative and love building unique stuff. I’d like to get into another build of some sort (I’m not a GC) but with the current market and funds being tied up I’m stuck. I was thinking of renting both units and building a larger primary with a similar detached unit to offset the new mortgage as I’ve outgrown where I’m at. 

Any advice would be appreciated! 

[Samuel Leatherwood]

What would you conservatively estimate the main home/rental in the back would bring in on a monthly basis? 

I know the area pretty well and seems as though $1900 would be conservative for the main house. You did say you put $70,000 into it, so maybe it is a nicer unit and could demand more. And then you have the other property. Long-term rental you are probably looking at maybe $1400 conservatively. Obviously it is a unique build but it is also small, so let's estimate low. So, all in you could conservatively bring in $3400 gross income. Granted, this could be substantially higher with a successful STR & if your primary is more of a luxury rental, but just estimating conservative for the time being.

What is your debt going to look like on a monthly basis for those properties including the refinanced mortgage + loan + etc.? 

It is hard to know what would be a good decision without knowing some more details. Good luck!