All Forum Posts by: Brian Joseph OConnor

Hi Elvin,

yeah I did this for the last 6 months.  My detached garage is finished, wired but not plumbed.  I decided to make it a bedroom for me while I rented out the 4 rooms in the main house.  I had to run an extra 80 amp subpanel so I had enough power to run a heater/AC, fridge, fan, computer etc.  I just go inside and use the kitchen and bathroom so it's no big deal.  I'm now going to have a contractor officially convert my garage into a 1/1 loft living space but it's $113K but I'll eventually be able to rent that space for $1300-1500/month so definitely meets the 1% rule.  Text me offline and I can send you pics of the garage as a bedroom set up and the planned conversion. 704-907-0201

Hey congrats on getting started and taking action!! I used a lender called Cap Center for my last deal and they charge zero closing costs and I just did an FHA house hack deal with them. I also asked for 3% closing cost assistance from the seller and used that money to buy down my rate. Good luck!

That sounds like mistakes you'll never make again.  But that doesn't help you now.  Consult an attorney but you owe this tenant nothing more than letting her break her lease and leave.  Just get rid of her asap!  Seriously, 150,000 people die every day so one of them died in your property prior to you owning it.  Big deal!!  Has nothing to do with anything.  This tenant is a problem so let her walk.  Also, don't let tenants do work on your property.

I'm a newbie with 1 property but renting out 4 rooms coliving strategy.  So I have 4 single occupancy tenants on 12 month leases.  I use TurboTenant for screening and collecting deposits/rent.  I use baselane bank for my business banking.  I self manage and it's far from passive but it's also not that hard.  You must have systems in place for automation, you must have good leases and leave nothing to chance.  I'm in the middle of my first eviction and it's not very fun.  I'm learning a lot and I'm sure I'll change some of my systems as I scale but I'm going to scale.

Thanks Kevin I really appreciate your thoughts and feedback. For such a low cost ADU conversion it would be in my best interest to bootstrap it myself and do some of the work and cash flow the rest. I have a good W2 income and my main house is already generating $1100/month in real cash flow. I'm probably not willing to do all the work you outlined just to borrow $50-60K when I can really scrounge it up myself just a little more slowly.

You are right about the ADU being much more profitable than buying another property. My main house generates $3700/month in rents. The ADU will rent for $1200/month. So this one property will make $4900/month and the PITI is $2600/month. All utilities are paid by tenants. The property is all new construction so while I'm putting back reserves for capex and repairs I don't expect to have much of that anytime soon. Also, with my rent by the room strategy I have mitigated/diversified my vacancy risk.

Once my ADU is done and rented I still want to grow my portfolio so that is why I would refi and take some equity to use for my next down payment.

Can you bill the tenants for the cost of utilities?  I have 4 single occupancy units on one meter for electric and water/sewer.  I pay the wifi but I make the tenants split the electric/water/trash equally.  The bills are in my name and I have on autopay but I invoice the tenants separately for their 1/4 of the bill.  It's worked out fine.

Funny Jesse! I'm learning that the super creative ways to use OPM only exists on REI podcasts lol. I'll eventually find a way to fund this project with terms acceptable to me and the lender.

@Jesse Rivera yes good idea but with only 3.5% down when I entered the deal 3 months ago there's just not enough equiity to interest any lender even DSCR. When I eventually get this conversion done that is my plan to get the ARV appraisal, refinance out of FHA and into a DSCR loan with my LLC/Trust owning the property and hopefully walking away with some funds for my next downpayment.

None of that makes sense. I had 3 contractors give me their quotes and ranged $40-60K. Yes ADU's are allowed. The house is a 4/4 SFR and the ADU is a converted garage so it will all be on 1 meter so it's not considered a commercial property.

I have a 4/4 rented out coliving style that I've only had for a few months and it's cash flowing well with me self managing. I have a detached garage that I want to convert to a 1/1 ADU for additional income. I don't have enough equity for HELOC, or cash out refi. No luck finding the 50-60K funding so far. Does a have an idea or know of a lender willing to do a stand alone 2nd mortgage?

once the ADU is done and rented it'll be time for me to cash out refi out of the FHA, pay off the ADU loan and move on to my next deal.

there’s got to be a way to make this happen