All Forum Posts by: Brian Poppleton

I suspect the issue had less to do with it having an ADU than with it being a refinance. Above in this thread I have a post about a refinance appraiser (Escondido triplex) giving an initial adjustment of $10K for a triplex versus a duplex (it also got $5K for having one total extra BR (which in our market and extra BR is worth over $20K). My appeal netted a $60K increase but there is no unit price as low as $75K in our market. The unit price per 2 BR is over $200K. The adjustment should have been close to $200K and it was a total of $75K ($10K initial for triplex, $5K for the extra BR, $60K added on appeal). in addition, I had been in virtually every comp used (it is my market). One that got an upper for condition was not as nice features as our unit (worse floor, worse cabinets). The appraiser for refinances will use the lowest price he can justify. Appeal is the only recourse. Do your homework. In our case our rehabbed triplex was receiving a lower appraisal than every triplex that had sold (most of which had not been rehabbed).

I tell everyone in the San Diego market that recovery of finances on BRRRR in this market is difficult not because it is hard to add the value but because it is virtually impossible to get the refinance appraisal to indicate you added the value (if you sold the appraisal would come in very near the negotiated price).

Do not expect different for your next BRRRR in San Diego. It is not right, but it is reality. The low refinance appraisals needs to be accounted for in the projections so there is no surprises.

Dan, Thanks for sharing your experience, this is very helpful because i plan to repeat the BRRRR around Vista. Hopefully the tax savings with new repairs bonus depreciation tax rules will help fill the gap of the low appraisals.

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This article makes it seem like a property in CA can have single family home, ADU, and JR ADU. Does anyone know anything about it?

https://cayimby.org/historic-adu-legislation/

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We built an $670 sq ft ADU on our property in Vista CA. Cost about 100k and a lot of sweat equity to build. Rents for $1800. When i refinanced the appraisal came in at $550,000. I thought it should be $600,000 or more. Out of the 5 comparable properties, 2 of them had ADUs and the adjusted value for mine was over $600,000. The comparison to the other three properties (no ADUs) i was given $55,000 bonus but they drug down the appraisal. I felt like i was done wrong so i wrote letter to lender. Then the appraiser upped the appraisal to $580,000 so i settled for that. If lots of sales around have ADU's the appraisal should be solid but if not too many in your area i would expect the appraisal to be all over the board.

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I think investing out of state makes a lot of sense. I have heard the saying "Live where you want and invest where it makes sense" I am trying to break out of my DIY mentality and investing out of state forces me to put together a good team. A good team out of state is way better than DIY wrong at home.

If you have a bit of extra land on your personal residence, you might consider building guesthouse or converting garage into one. You already own the land.

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One CPA for sure. I have a client that had to pay 200k plus in tax that could have been avoided with some tax planning. The problem was that another CPA was doing accounting and taxes for one business and i was doing the other. But i still consider it my fault for not being more proactive and communicating with other cpa.

Good CPAs will be comfortable filing and maximizing tax benefits in any state.

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Most of your business expenses are easy to identify. Keep track and document them all. Where there are some tax strategy tricks is classifying between a repair and capital improvements. Repairs are better, but you have to do it right.

Other expenses that usually are not fully utilized are

1. Home office

2. Auto

3. Travel

4. Business meals (could be with your wife if you discuss business and document it)

5. Education

I recommend hiring a good CPA and good bookkeeper that communicate well with each other and you will do great.

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A bad CPA will cost you a lot more than 4k.

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All Forum Posts by: Brian Poppleton

Brian Poppleton has started 0 posts and replied 28 times.

Post: House Hacking in San Diego

Post: Completed ADU apraisals california

Post: ADU - 2 units possible?

Post: Completed ADU apraisals california

Post: I want to invest out of state. Any ideas?

Post: CPA needed for two separate businesses

Post: Tracking Expenses for Tax Purposes

Post: Wealth Ability- formerly ProVision - Tom Wheelwright