Pre-approved for a loan in Cali., Can I use this Out of State?

Question

Hey guys

Taking baby steps to build my wealth! So I am pre-approved for a 300k loan here in California thru my mortgage broker. Can I use this same pre-approval for an acquisition of a  property out of state? I am looking in different OOS markets that has a high rent to price ration. I've narrowed it down to  Cleveland OH and Santa Fe NM. I have options to either buy in California (LANCASTER, PALMDALE AND THE GREATER ANTELOPE VALLEY) or try my luck out of state where the barrier to entry is lower than CALI.

Any input is greatly appreciate!

Thanks BP community!!

Marty L. · Answer

Thanks SO much for that detailed response! I agree with you 100% that this is a very low price. I am waiting for him to build his $50,000 ADU and I'd like see how that turns out. If I get more info or get a bid proposal I will post it in here!

Sebastian Marroquin · Answer

@Marty L.I am exploring an addition and got a rough estimate of 50k all in on a 900sq foot ADU. If I ever move out to a different neighborhood I will reconsider. I do have equity on the property but I dont plan on using that anytime soon.

: sebastian I agree with @Ami Singh : 50k for a new construction Adu is very low (which seems good) but a bid that low may hurt you more than help you. Thats $55 per sq ft. Even Contractors that are not making any profit cannot make that number work between just material and labor.

The lowest I have heard a contractor do it for (with no profit) is for about $80 per sq ft.

If you have a family member contractor (that knows what they are doing and can do it in a timely manner) will still be at around 90/100$ per sq ft.

I would cautioned you to go with someone like that. They just won't finish the project...

Then you have plans to build ($5k to $10k ) and city fees: $5k to $20k depending on city.

At this point in my life: I know that its always good to negotiate on price but also that people that are good at what they do, timely, good communicators, knowledgeable, ethical and honest deserve to make a reasonable profit.

Marty L. · Answer

@AmiSingh

Thanks for the reply! A BRRRR investor bought a property in my block and I got to know him. He will be building one for his property and he mentioned that If I liked how it looked, he can do it for me as well.

Ami Singh · Answer

Hi Marty,

Congrats on taking the next step of building your RE empire!  Regarding the ADU, has the person who gave you that bid built an ADU before?  I ask because this bid seems very low.  I have experience designing, permitting and building ADU's and would be happy to review the bid to see where something might be missing.  Thank you, Ami

Marty L. · Answer

@KierraUnderwood.

Hey Kierra! I would love to connect with you and contact! Please PM the info or reply to this thread

Thank you for your input!

Marty L. · Answer

@Sebastian Marroquin

Thank you so much for taking interest on my post!

I am exploring an addition and got a rough estimate of 50k all in on a 900sq foot ADU. If I ever move out to a different neighborhood I will reconsider. I do have equity on the property but I dont plan on using that anytime soon.

Kiera Underwood · Answer

@Marty L. most of the investors I know utilize a national lender that's licensed in every state. His rates are pretty competitive right now and he's got unmatched experience. Happy to introduce. Good luck getting started!

Sebastian Marroquin · Answer

@Marty L. hey marty

I am going to assume that you have a SFH in Burbank: only bc you mentioned that you were house hacking:

1. if you do: have you looked into putting in an ADU or Jr. ADU or both: it would increase your home value and your cash flow for about 40k to 60k (I don't think you can buy another unit and rent it out for $1500 here in the LA area or OH (without the implied risk) :)

2. If you own a condo in burbank: then why not do a primary residence purchase in adjacent cities: i.e. sun valley, or azusa, glendora etc : once your property is rented out fully: you could use a portion of the rents as income and could qualify for a higher mortgage loan.

You could go further out and buy a SFH and again convert the garage to ADU etc.

I'm putting up 2 units for sale in Pasadena : they will go for about 950k to 1 million

Adjacent cities as you know, have similar price points.

I know you don't want to sell... and if you increase your income or decrease your debt or increase your funds... then don't.

but also consider your (return on equity? )

You may have 100k , 200k , 300k + sitting in equity... what is that money doing for you?

I am very conservative and if you asked me that question the same way: I would say - that it works for me and already working on the next one.

So obviously (don't change your belief system... ) This comment is just incase you have not done the math and consider that perspective.

I guess I am making a lot of assumptions...

Marty L. · Answer

@Jason Kudo Thanks for your input sir! Very true, I believe that the Pasadena/ Alhambra or any So. Cal market has a higher point of entry and this is why I considered (still considering OOS investing).

Jason Kudo · Answer

@Marty L.

Hey Marty, I am a real estate agent in the San Gabriel Valley. Congrats on the preapproval. Looks like you got the question of transferring your preapproval answered so I’ll leave that alone but say that it will be difficult to find a duplex in Pasadena or Alhambra for under $600k as I have helped a past client find fixer duplex in Pas and they paid mid 6 for it. In fact, you will have a hard time finding a single-family in Pas or Alhambra for under $500k. What questions do you have about this?