All Forum Posts by: Angelique Herman

 @David A. Your project looks awesome so far! Are you planning to do a cash out Refi at the end? Asking since I just had a property with a JADU appraised and the JADU aspect of the property only appraised for half of what it cost to build (50k). I’m wondering if this is just my area (central coast, Santa Maria), since people have not started building ADUs much yet. I’m hoping the part of LA you’re in there there are more comps and therefore you can get a higher valuation from  an appraiser. I would be very interested to see the outcome. :)

Hi Ralpheal,

Thanks for your deal deep dive. This is very helpful to me and inspirational for me to post my own ADU story. Mine did not end as well as it could have though since it cost me 84k and in the end the appraiser assigned a value of 50k for it. :( womp womp.

Did you do a cash out refi after it was completed? If so, would you share what the appraiser valued the new ADU at?

Congrats on the passive income! You did great! We also super celebrated getting our first rent check this July. 

Angelique 

Hey Dan,

Thanks for your response. Do you have any good tips on how to know what an appraiser will do without knowing one? That was the problem I had. There aren’t comps in my immediate vicinity so didn’t have that to look at either. 

It’s also not as bad as it sounds because I still get good cash flow from the studio unit  but just had to invest the 44k to get it. 

Hey Dan,

Thanks for your response. Do you have any good tips on how to know what an appraiser will do without knowing one? That was the problem I had. There aren’t comps in my immediate vicinity so didn’t have that to look at either. 

It’s also not as bad as it sounds because I still get good cash flow from the studio unit  but just had to invest the 44k to get it. 

Very informative story! I am following along. I am an ADU investor in Santa Barbara County so slightly different rules but still helpful. :)

Hi BP folks

I’m wondering if any California investors have experienced this same issue…

Backstory, I am in the mid stages of a long term live in BRRR. I have a SFH that's has the garage converted to a Junior ADU fully permitted. It's separate from the main house and currently rents for 1445/month. I'm in Santa Maria, CA in Northern Santa Barbara County.

We just got an appraisal done and got a very low value assigned to the JADU portion. The issue is that this appraiser only has 1 other property that has a converted garage studio and derived a value of 50k for it, then applied this value to the other SFH comps in our neighborhood. The lack of a garage penciled out to -10k so the net increase for the studio only netted +40k on this appraisal worksheet. This studio costs us 84k to build, so having it appraise at less than half of the cost is obviously a problem. This particular refi could still work out for us but the larger concern is for the future moving forward.

If the future appraiser values the as-yet-to-be-built future ADUs at roughly half of what it costs to build, I don't think that's something we can continue to do. Are there any options for instances where there aren't good comparables in the area? The issue seems that ADUs have not been built a lot in the area yet and that properties with ADUs have not been sold much. I would think that a buyer would value a permitted studio ADU that costs 84k to build higher than 50k already built, especially considering it grosses 1445 per month in rent. Is there a way to value it differently as if marketed to an investor as a multi family? Or does anyone know of lenders that are more friendly or like to work with folks trying to do a cash out refi on a property with an ADU that doesn't really have close comps? Thanks for your help.

Thank you, all for the replies.

I do want to invest my in my area (central coast of CA) and I am currently but the barrier to entry is really high so it’s going slow. I have 1 property right now that we made into 2 units. I wanted to investigate markets with lower price points and higher cash flows but don’t have any time right now to really do all of the work out of state, so I’m looking at turnkey as another option. 

Hi all,

I’m new to investing and want to try out of state investing. I’m looking into turnkey opportunities to try out of state investing because I don’t currently have the time to do it all myself. Has anyone used Rent to Retirement? Does anyone have other turnkey they’ve liked and used? Thanks!