Garage Conversion and Addition ADU

[Manraj Singh]

Investment Info:

Single-family residence buy & hold investment in Vista.

Purchase price: $565,000
Cash invested: $50,000

Currently living in the main house and Plan to convert the 400sq feet detached garage into a 600sq feet 2B1Ba ADU.

What made you interested in investing in this type of deal?

Option for adding an ADU

How did you find this deal and how did you negotiate it?

Retail purchase through a agent who specalized in ADU laws.

How did you finance this deal?

conventional , 5% down.

How did you add value to the deal?

valued it on future cash flows. Paid the asking price but I feel it was priced 35k over

What was the outcome?

Design and plans are complete. Utilities to the garage are added.
Waiting to a construction loan to fund the project. Hit roadblocks twice,
1. HUD construction loan cancelled due to refinance of main house at 5% ( up from 3%)
2. 2nd Lien Construction loan cancelled due to lowering of LTV, resulting in interest rate of 11%

Lessons learned? Challenges?

green-light the financing before investing into the project. Or have a couple fo back up.