How to get 200k loan to complete an ADU?

[Cesar Garcia]

Hello fellow real estate friends. I need help and guidance, at the moment I'm running a project in Los Angeles to build an ADU. We are short 200k for the project and cannot use HELOC anymore due to a previous cash out refinance 6 months ago so our equity is low. Can anyone share any tips on how to get 200k loan to complete the project without using our homes equity since it's very low now.
- best regards ! 

[Jonathan Taylor]

@Cesar Garcia Talk with contractor/ADU builiding companies as they sometimes offer financing for ADU builds. Rates and terms vary as Im not an expert since this is a direct to consumer lending product (Im a broker). The challenge with 'Value Add" ADU builds is the ARV is going to be much less than the cost of building it. I converted my Garage into a permitted ADU, cost me 80k (as is conversion, no added sq ft) and the appraiser added 20k in property value. The tricky needle to thread is to not get a bridge or short term loan since refinance to capture the perceived ARV isn't realistic and would set you up for failure. Just be careful, A lot ( and I mean A LOT) of people think if you have a SFH and add an ADU, comparable sales are duplexes. This is not true. Comparable sales are SFH with a garage since rental income is not how this asset is valued and the original Zoning is SFH.