House Hack/Live and Flip Advice Santa Clarita CA or SFV

[Jonathan Vona]

Hi Everyone,

Need some advice. My fiance and I own a condo in Santa Clarita 2/2, which we plan to rent out and move on to the next investment. (We would cash flow about $300)

We're thinking of buying a SFR with a detached garage and maybe extra lot space for a JR-ADU down the line. We plan to buy at around 550k with an FHA loan and 3.5% down, and an interest rate of 2.9% All said and done we would be paying about $3,200/mo on the high end. We would repair the small cosmetic things in the main house and rent it out for about $2,700 to $3,000 depending on the going rent rate. I prefer to low ball it, so lets just say $2,600/mo rent payment to us from tenant. That would leave us with an approximate housing expense of $600/mo, while we convert the detached garage to a 1 bedroom ADU for ourselves. After 2 years or so (to avoid capital gains) we would either sell it and reinvest the money or move out and collect the cash flow from main house and ADU.

We would probably invest a total of $75,000 with the down payment, closing costs, and ADU work.

Is this a good investment? Do the numbers make sense? Seems like a good long term use of $75k. Correct me if I am wrong. 

[Dave Foster]

@Jonathan Vona, Have you lived in the condo for two years?  If so I'd consider selling it and taking the tax free gain to fund your improvements to the new property.  You could get it done faster and with less finance expense.  $300 a month cash flow on a condo is just one hoa due raise from being negative.