All Forum Posts by: Dennis Maynard

@Dennis Maynard Was that a link for the market update? I could't click on it.

Awesome information on the current state of the Los Angeles market. Thanks for sharing it with us. 

I agree that we are not seeing the amount of homeowners with low levels of equity in their homes that we saw in 2008. It follows that the homeowners who have high equity, but a sudden inability to pay the mortgage each month would just sell. This all sounds logical to me and is what I would do in their position. However, not everyone thinks the way I do. It ignores the fact that many homeowners view their home from more of an emotional perspective (shame of not being able to afford their home, hanging on to the perceived security of "owning their residence" etc, etc) than a financial one. It's this perspective that causes owners to get so far into the pre-foreclosure process that they couldn't hope to turn things around even if they had a shift in mindset. Denial is a powerful thing. I am seeing this happening already when I look at the default amounts on the pre-foreclosures in my local market. Most have been in pre-foreclosure for many months. The fact that more owners will follow this path is purely speculative on my part and I may be way off base. For my own perspective there is nothing in the current market that makes me feel an urgency to invest. Quite the opposite, in fact. Fast forward to next year, I may look back and see that I was completely wrong. With that said I am pretty confident that, even if I am, the market conditions will not be such that I will feel I missed an opportunity. 

I'm not a fan of the garage ADUs, ADUs with awkward access, or ADUs with inadequate parking situations, but I'll take a stand alone ADU over a duplex with no room to build at todays valuations all day long. Sign me up!

 You may like this.

Market Update

@Dennis Maynard @Jonathan Taylor

To clarify what I meant by "values will be closer to duplexes minus the financing benefits of duplexes counting the rent as income," I think a SFH with an ADU with be the same from an income perspective to an investor with a duplex (two units only) or someone who wants to house hack and be able to afford more house. Put more simply, right now SFH + ADU is valued more closely to a SFH than to a duplex, but I think it'll move towards the duplex valuation.

I'm not there. Agreed on the income, but the long term pricing on all rental property is subject to the strength of the market. So if the rental market is weak like it is right now, then the "added value" of the ADU will stay in question. True duplexes will be based on income value. SFR / ADU will likely stay in SFR with a little bonus income. If a renter is faced with the opportunity for a unit in either (all other things being equal - ceteris peribus), they will likely choose the duplex rather than live in someones garage.