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All Forum Posts by: Carl Morgan

Carl Morgan has started 4 posts and replied 17 times.

Hi Kenny,

Im in the early stages of pursuing a ground up construction multi-family development.  Would build about 9 units in the Rolando area of San Diego, CA 92115.  

I own the property with an existing DOT of 500k. Property is worth 1.5 (have received 3 off-market offers in the last 30 days at that range) but I'd like to develop it and hold long-term.

What type of construction financing is available to me in this market?

Thanks,

Sounds good!  My plans are approved and now just getting an idea on the cost of all the big stuff such as foundation, framing, trusses, etc.

Hoping to get it done for under $200 sf

Post: My costs didn't support the rents

Carl MorganPosted
  • Posts 17
  • Votes 5

Since you said the market is stronger for smaller units....split those 4 bedrooms in half for the time being so you can get positive again.  Then keep keep building the smaller units since that seems to be the sweet spot.

Thanks Tim.  How are these things even penciling out anymore?  Barely pencils out at owner-builder, let alone going the GC route.  

Quote from @Tim G.:

ADU's are one of the top plays right now, there are many variables but if it works. It tends to work well.

The costs are all over the place, you have owner occupants with equity that are being used as ATM's by designers and contractors who can provide the "be an investor HGTV" experience. You also have the investors with construction experience, who can commit to not overbuilding and they're coming in with some solid numbers. Under $200 a sq/ft 

Besides the above mentioned be sure to know how are you going to pay for it. Often the house does not appraise at a value that will allow you to retrieve those costs fully. But, it'll be very good cash flow. One perk to this is assessment values seem to be coming in very low, so your property taxes will be favorable. Also, consider how you build this additional unit while not interfering too greatly with your tenants on site. 

I am building an ADU at a property that currently cash flows $300 a month in Oceanside that I also consider a poor investment until the ADU is in then its going to be fantastic. There could be another play in which you build a 1200 sqft SFR with a garage, then later turn the garage into a Jr. ADU. Now you have three units.

Hi Tim,

Thanks for sharing! I have fully approved plans for a 1,200 sq ft ADU w/ 1 car garage.

For the $200 sq ft, is that going owner-builder or using a GC?


Quote from @Tim G.:

ADU's are one of the top plays right now, there are many variables but if it works. It tends to work well.

The costs are all over the place, you have owner occupants with equity that are being used as ATM's by designers and contractors who can provide the "be an investor HGTV" experience. You also have the investors with construction experience, who can commit to not overbuilding and they're coming in with some solid numbers. Under $200 a sq/ft 

Besides the above mentioned be sure to know how are you going to pay for it. Often the house does not appraise at a value that will allow you to retrieve those costs fully. But, it'll be very good cash flow. One perk to this is assessment values seem to be coming in very low, so your property taxes will be favorable. Also, consider how you build this additional unit while not interfering too greatly with your tenants on site. 

I am building an ADU at a property that currently cash flows $300 a month in Oceanside that I also consider a poor investment until the ADU is in then its going to be fantastic. There could be another play in which you build a 1200 sqft SFR with a garage, then later turn the garage into a Jr. ADU. Now you have three units.

Hey Tim - I'm also planning to build an ADU on my SFH in Oceanside (to rent out). Would be great to connect! Would be interested to hear who you used for the plans as well as the build. Thx!

Hi Lisa,

Were you able to get started on your ADU? I have a 1,200 sq ft fully approved one and I'm starting to get quotes on the different components, i.e. foundation, framing, etc.

Depends on size, brand, type (electric, gas, electric heat pump style).

I just replaced my gas one at rental and I went with the 12yr rated one and bought the Allstate protection plan for $69 that gives me 5 more years after the 12 yr manufactures warranty.  Maybe I went overboard, but now I know my water heater is warranted for at least 17 yrs.

I think the water heater cost about $800 and install cost and updating to code costs about $400

I doubt the home warranty company would pay for a water replacement or that age.  It's a "warranty" for things that break during their useful lifetime not outside of that lifetime.  The water heater was probably only rated for 8 ton12 years.

Home warranty's have their place, but they're not a cure all 

Nice!  Sounds like a good investment strategy! 

 I'm not far enough along to touch financing, but my gut tells me to use a construction loan or some sort of hard money.  Not sure if I'll even explore the family and friends things since I don't like too many people involved either actively or passively.

How about you?  What's your financing strategy and what part of San Diego are you developing?  I'm near SDSU... Rolando area 

What are you developing in San Diego?  I live there and I'm in the early stages of developing a 9 unit project.