All Forum Posts by: David Maldonado

@David Maldonado - Chris is spot on.  If there is a lien/mortgage secured to the subject property, than its not a cash purchase.  It needs to be an unsecured loan, so nothing shows up on the title report as attached to the home.  If the loan is secured to a different property, that is fine as well!

Another idea if you have a good (well great) network of HML's/friends with capital, is for someone to lend you 90%-100% LTV on a HML. And than do a cash out refi into a conventional loan immediately and repay the HML. You can also do a 1st HML at 70% and maybe a friend of colleague can be in second position, 2nd lien at whatever they are willing to do. Than you can do a non cash out refi immediately.

Or the easy path, as you said is to wait 6 months for the ADU to be built. Are there comps in the area with ADU's? Keep in mind the appraiser may give you a different value than you are hoping for if there is not any recent data/sales of homes with ADU's in the area. That can be a tough one for the appraiser.

Yes you can used delayed financing w/hard money. It is treated as a purchase by most HMLs - my question would be, why not purchase with hard money instead of putting debt on the property after?

All the same steps are taken, whether funding occurs before or after the purchase.

It depends on your partners and the upside. They are going to be the silent investors but in a partnership they are going to be taking on both financial and civil liability. Managing the deal is a lot of work, but you aren't risking any of your money. You could simply walk away, but they can't. In a partnership, all partners are responsible for the business. If there is a civil liability case that doesn't go your way, all three of you will be responsible. Those liabilities are a lot to take on for putting in 50% of the equity but only getting 1/4 of the profit. As far as upside, if the numbers are very promising, that might entice an investor to get involved on these terms. 

For 4 units or less per lot the cap rate is not used to set value.  The value is based on comps.  Cap rates do not apply in your case.  Comps will be difficult to find.  This typically produces low appraisals.

I am a little perplexed on your statement about RSO. I am not an expert on L.A. Rent Control, but Costa Hawkins should apply with regard to any local rent control ordinance. Combine this with the state rent control ordinance and you should be exempt from rent control for 15 years after the completion of the unit that first made the unit a multiplex (your recently completed ADU).

In general, JADUs lower the value of the property.  It definitely does not make the property a triplex.  It can only be rented with owner occupancy.  I suspect this will be a negative value add option (meaning cost to add the JADU is more than the value that it will add).

I suspect splitting the lot will produce the better return, but you have to run the numbers.

Good luck

Does anyone in Orange County have any experience with an architect that specializes or at least has experience with garage conversions? I’m very interested to tackle his project as an owner builder to save money to use higher quality materials. I’m located in Huntington Beach, has anyone else done this before? Would love to hear others’ experiences.

Hey David , 

I own .5 acres in Riverside Ca . Half of the lot is completely empty and can easily have 2 units built on it . Curious what the process is for SB9. My property already has a SFR and detached ADU . Thinking about heading down to city planning department and see if I qualify .

Hi @David Maldonado, hope you're keeping well. I'm starting the ADU process on a property in LA. Apparently a 8-9 month permit period! I can only image what they're going to do down there with SB9 or 10. Frustrating. But the lot is too small anyway, so won't be going that route.