Los Angeles Post ADU Build BRRRR Strategy: How to Get Cash Out

[Caleb Lee]

Hello BRRRR aficionados!

After purchasing an SFR in Los Angeles in 2020 and renting out the main home to tenants, I'm close to finishing up building a new detached ADU in the rear as well, complete with a private entry and backyard for another set of tenants. The ADU (with a separate address) adds about 700sqft (2BR/2BA) to the existing 1100sqft (3BR/2BA) main home, with the additional sqft and bed/bath count showing up on the property's title report.

The question now: How do I maximize how much $$$ I can pull out of this property so that I can do this again? I've been told that a cash-out refi is probably the easiest way to go, but here's my open questions for the community:

1. Maximizing Equity to Pull Out: How do I maximize the appraisal value of property, given that it's now much more square footage, bed/bath count, and rental income potential?
2. Refi Options: Is a cash-out refi, HELOC, or other method to pull out the newly built up equity the way to go?
3. Loan Limits: How do I get around the CA jumbo loan provision, which prevents how much I can pull out at the current rate? I had looked into cash-out refi-ing before, but ran into the ~548k maximum loan as a blocker (which in hindsight is puzzling, because it looks like the LA county jumbo loan threshold is ~822k)
4. BONUS: What would you do in my shoes?
   

Thank you for your help and advice!