All Forum Posts by: Caleb Lee

Hi BP! I've finished my detached ADU (732 sqft, 2br/2ba) in Los Angeles and now I'm looking into the post-build appraisal value to determine whether to hold or sell. I've seen a bunch of different ADU posts from 2020-2021 showing that appraisers were previously giving very little to ADUs and treating them as an amenity like a pool house or home office, rather than as fully livable, rentable square footage.

I've also heard that with the passage of SB-9 in CA, this effectively makes every single R-1 zoned SFH lot effectively into a duplex-able lot, which could unlock the potential for these SFH + ADU properties to be treated as duplexes for the appraisal, which would result in more favorable ADU valuations.

Anyone seen any favorable appraisals that they'd be willing to share?

Hi @David Maldonado, just stumbling across your update now - I'm in a similar situation where I've finished my ADU in Los Angeles and now I'm looking into the post-build appraisal value to determine whether to hold or sell.

Do you have the contact information for the lender that did the appraisal who referred to SB9 as a gamechanger? I'm curious whether the bill now means that they can use duplexes as comps for all California properties, rather than just some cities/regions. Feel free to DM me directly as well. Thank you!

Thanks to both Dan and Jesse for the response - definitely thinking that now is the time to take advantage of lower jumbo rates, so long as I can get a good enough comps for the appraisal, since that'll be the key deciding factor of refinancing here. Typically, can you influence the appraisal by coming to the table with selected comps of your own, or is that something that you're stuck with whatever loan provider you're getting the refi from? Wondering if shopping around to find a lender that "gets it" for ADUs is worth the time and effort.

Hello BRRRR aficionados!

After purchasing an SFR in Los Angeles in 2020 and renting out the main home to tenants, I'm close to finishing up building a new detached ADU in the rear as well, complete with a private entry and backyard for another set of tenants. The ADU (with a separate address) adds about 700sqft (2BR/2BA) to the existing 1100sqft (3BR/2BA) main home, with the additional sqft and bed/bath count showing up on the property's title report.

The question now: How do I maximize how much $$$ I can pull out of this property so that I can do this again? I've been told that a cash-out refi is probably the easiest way to go, but here's my open questions for the community:

1. Maximizing Equity to Pull Out: How do I maximize the appraisal value of property, given that it's now much more square footage, bed/bath count, and rental income potential?
2. Refi Options: Is a cash-out refi, HELOC, or other method to pull out the newly built up equity the way to go?
3. Loan Limits: How do I get around the CA jumbo loan provision, which prevents how much I can pull out at the current rate? I had looked into cash-out refi-ing before, but ran into the ~548k maximum loan as a blocker (which in hindsight is puzzling, because it looks like the LA county jumbo loan threshold is ~822k)
4. BONUS: What would you do in my shoes?
   

Thank you for your help and advice!