All Forum Posts by: Dan Portka

While its possible others have overlooked the value add opportunities you've mentioned, you might want to do a bit more due diligence here. Over the last few years there have been many investors in the area buying properties with the specific strategy to add units/adus wherever possible. 

How much value add is there actually if you consider all the construction costs and ARV?

what zoning is it in? you may also want to look into city specific regulations. both will impact what you can and can't do.

Hey Tammy, local agent from Pedro here! I've had a good experience with Paul at Pacific Sands, give him a call - 310-280-6408. Happy to chat further if you'd like.

@Lawrence Ng what types of properties are you looking at? Maybe consider something cheaper, ie a condo and rent out the other rooms? 

sounds like an awesome deal, congrats!

hey @David Lasky If you're okay with the inherent risk, sounds to me like your plan will work. I'd recommend giving a lender a call to see what you can qualify for, let me know if you need a solid recommendation. I know someone that does reno loans as you describe too. 3/4 units are tough with FHA in LA due to the self sufficiency requirement. Because our rent to price ratios are so low here, it usually doesn't work out. So you'd likely be going the conventional route. You could put less down and not have the self sufficiency requirement with a duplex, have you considered that?

Awesome congrats! Is this a house hack?

@Juan Mora I have an unpopular opinion that 5% maintenance / 5% capex isn't high enough in these low cost/high cash flow markets when investing out of state. I know that's what everyone will tell you to put, but living through it as an OOS investor myself, it's just not enough. In your case, if the average turnover cost is $2K (a guess), that's more than a full year of what you've budgeted for maintenance and capex. Have you talked to property managers in the area? What is the typical turnover cost and how often do tenants typically stay? That will help you better project your expenses (including vacancy). Also, watch out for extra costs from your PM - they might tell you 10% of rents is their fee, but also charge for things like maintenance, inspections, turnover/marketing, lease signing/renewals, etc.

Bottom line though, I think you're on the right track. Run the numbers on a lot of deals and when you find one that suddenly feels better than the rest, jump on it.
 

I too was weary when I first started investing about balloon repayments until I fully understood. Now I'd prefer interest only w/ balloon. Cash flow will be much better since your HELOC payment is lower. Most people will refinance their main mortgage or sell within 10 years anyways - when you do you can pay off the HELOC.

@Kristine O. HELOCs are typically 10 year terms. Some even offer interest only w/ balloon repayment at the end.

@Mehul Thakkar I'd recommend reaching out to @Rob Drum