All Forum Posts by: Brian Caudill

Quote from @Wendy Patton:

I have bought this way many times but do check out the probate situation and that the person with authority is the one signing the deed - use a title company and they will make sure it is all done properly for clear title.  

Are you saying you’ve done these exact types of deals in regard to this specific question or subto transactions in general? Might have a few questions for you. Thanks !!! 

I just love all these brand new accounts backing Paces course!!! LMAO!! 

Hey everyone, thanks in advance for any advice or feedback you send our way! We are looking to purchase a 5 unit that is zoned for 3 dwellings but also has 2 unpermitted studios in the rear. We currently have an FHA loan on our primary home but are looking into using the "increase in family size" exception to get approved for a second FHA loan. Would the 2 studios in the back of the lot keep us from being able to qualify for an FHA? All units are occupied so dressing them up as storage units seems to be off the table. The only reason we are considering this deal is we would be paying pretty much the value of the main house in the front of the lot. Seems like the additional red tape might be worth it, but what are your thoughts?

Quote from @Travis Biziorek:

Hey Casey, where in CA are you? I'm on the Central Coast and invest heavily in Detroit. It's been absolutely fantastic for me, and I have 12-doors now.

Outside my own investing I help others get started there too. 

I'll be down in Oak Park next week but home base is Arroyo Grande.

Hey Travis, what part of Detroit are you investing in? 

Quote from @Matt Devincenzo:

In Socal you're probably looking at more like a 3-5 year process, and your entitlements will likely cost $500K (just a guess). It doesn't sound like you're familiar with CEQA or the associated requirements. In a nut shell you have to look at the full and complete scope of just about any discretionary project and (most likely) cannot process a rezone as a stand alone approval. You will likely need to initiate a Community or General plan amendment, provide a proposed use (sounds like residential), if that is more than 1 unit then you'll need a site plan, which would need a map to subdivide, requiring a 'Tentative Map', which then....and evaluate its impacts on water/sewer/traffic/greenhouse gas amongst others...

The speed and efficiency of completing this does depend largely on the municipality, but if this is one of the big players (LA, SD, Irvine) then I'm really confident in my timeframe. A smaller area it could be 1/3 lower possibly...but it will still be measured in years and hundreds of thousands in costs not months and thousands...the devil is in the details and the details could mean I'm overstating the requirements, but I've got a several clients I can point to who I cautioned the same and they thought I was exaggerating only to find out years later that I was being as real and up front with them as I possibly could...

I think this is the exact response I was looking for!! I was curious what hoops I would have to jump through and you’ve given me a pretty defined idea of what it would take to bring this to life. Obviously I’m going to cancel escrow and step away from it. Thanks again Matt! I really appreciate the feedback! Also, thanks to everyone who chimed in here. Have an awesome day everyone. 

Quote from @Amy Raye Rogers:

What questions do you have specifically? Most of the fundamentals are in the post.  I'm happy to address any gaps that still remain.

Thank you for the quick response! I guess I’m just trying to understand how you pay your HELOC down to reinvest into the next project. You mentioned how you term the debt out into a mortgage and that you don’t refinance at the appraised value. Are you buying these properties at below market value allowing you to refinance a minimal amount? I think if you could use a previous deal and show us the numbers and how the capital moved between the HELOC through the house into a refi and back to the HELOC. I think that would help tremendously. I absolutely love the idea and just want to know how to potentially follow your lead. Thanks again. 

Quote from @Carini Rochester:

For a price, ask for 6 months (or a year) to work through the zoning change process with the sale contingent on you getting the zoning and approvals you need/want. If the zoning change doesn't go through you would lose the money you paid for tying up the property for six months plus whatever you spend on the approval process.

Thanks Carini, I replied to Justin and then saw your response which is essentially a more detailed version of his response. I think you guys are on to something with that “contingent on” amendment. Thanks for the breakdown, I was really excited about the deal because I had an investor lined up and everything. Obviously they only want it if they can develop so it’s a little scary betting the 100k on being able to rezone. 

Quote from @Justin Hammerle:

@Brian Caudill - I would recommend amending the agreement contingent on the rezone.  As you mentioned there is significant risk and a rezone is not an easy lift.  If the seller won't go for it, I would kill the deal.

 Thanks Justin, that’s a really good idea and I might have to do that. Thank you for the suggestion man, it’s greatly appreciated. 

Quote from @Amy Raye Rogers:

@Patrick Rhodes We term the debt out into a mortgage... but only the debt. We don't refinance at the "appraised value" leaving all of the equity in the property. Most BRRRR investors try to recoup their original capital in the form of cash. We don't need to do that as our credit lines are sufficient to buy more purchases without down payments. Hope that helps clarify!

Can you break this down a little more?, I'm trying to wrap my mind around it. I have a nice HELOC ready to go and I'm trying to put this together and draw a picture in my mind of your process. Thank you tons, and nice work on thinking outside the box! That's the only way to truly thrive in this high interest market.

Hey guys, I have a 2.62 acre lot that I’m in the process of purchasing to flip or develop. We opened escrow yesterday and it’s a 60 day with a 45 day inspection. Chicago title showed the zoning as R1 but after further digging with the county planning department I have found that the lot is actually DI which means Drilling island. Unfortunately there isn’t a lot you can do with a lot zoned DI but I’d like to know if anyone has had any luck changing the zoning from DI to R or C? From what the planner said, it can be done but there are absolutely no guarantees that it will go through. I’ll be in the deal around 100k so I need to figure out the likelihood of getting a zone change before I’m stuck with a lot that all I can do is park a few vehicles on or potentially use for a solar field. This is what I have found on DI uses

• 19.48.020 - Permitted uses.

  The following uses and all others determined to be similar to these uses pursuant to Sections19.08.030 through 19.08.080 of this title are permitted in the DI district:

  A.

  Resource extraction and energy development uses:

  — Oil or gas exploration and production pursuant to Section 19.98.050 of this title.

  — Solar energy electrical generator which is accessory to a permitted or conditionally permitted use and where the power generated does not exceed the total on-site power demand.

  (Ord. G-7482 § 77, 2007; prior code § 7105.02)

• 19.48.030 - Uses permitted with a conditional use permit.

  The following uses are permitted in the DI district with a conditional use permit:

  A.

  Recreation, entertainment and tourist facilities:

  — Park or playground;

  B.

  Miscellaneous uses:

  — Auto parking lot

  — Recreational vehicle or boat storage, private, when contiguous to, and for the benefit of, a residential development

  — Solar energy electrical generators when not accessory to a permitted or conditionally permitted use

  — Subdivision drainage sump, provided that mineral rights owners have given written consent.

  Thanks ahead of time to anyone who might be able to help.