All Forum Posts by: Emmanuel Ola

I eventually used a DSCR loan. Will close in few days.

Thanks so much for your input. We have the same concerns and I am hoping we can get more responses from the veterans here. Thanks again. 

Quote from @Robin Simon:

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 Hello Robin,

Let's connect please. Thanks

Hello BigPocketers,

I’m seeking advice on the best way to approach this situation. I recently purchased a 0.42-acre piece of land for $90K. Directly across from it is a vacant 8,000 sqft lot listed for $75K. Considering the high prices of other lots in the area, many have said I got a great deal.

The land I bought has a 2-bedroom, 1-bath house that was listed as 550 sqft but is actually 750 sqft; the records just weren't updated with the city. Fortunately, the city has given me permission to rehabilitate the house, which I plan to use as an Airbnb. My wife and I already have two new constructions we rent out on Airbnb, netting us over $4K monthly after expenses. We believe rehabbing this house could be a great addition to our portfolio.

I’ve consulted several architects who’ve indicated that I could potentially build up to seven 1,250 sqft homes on the lot. My plan is to use all seven buildings as short-term rentals (Airbnb). However, if short-term rentals are no longer allowed or become less viable, I’m prepared to switch to long-term rentals.

Funding the entire construction at once is a challenge, so I'm exploring the best strategy. I've found a reputable builder who quoted $110K to rehab the burnt house, including expanding it to 1,200 sqft. The comps for a 1,200 sqft house in this area range from $250K to $300K, which would give me a minimum of 25% ARV after rehabbing the house. I've also been pre-approved for a $125K HELOC against my current residence, which I plan to use for the rehab and landscaping. My idea is to refinance after the rehab, use the proceeds to build the second house, and repeat the process until all seven homes are completed. Essentially, this follows the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method, but with the twist of continually developing more homes on the same piece of land.

Do you think this strategy makes sense? I’ve considered a construction loan to build everything at once, but the stringent conditions and potential delays make me hesitant, especially since this would be my first time seeking such a loan.

I would appreciate any advice on the best way to make this work. Should I proceed with the HELOC and refinancing strategy, or is there a better approach?

Thanks!

 I agree. Thanks

 Thanks for your response. You're right about the amount not worth pursuing in court. I'm just pissed with the seller's agent for not disclosing and wish they can be punished for being dishonest. 

Quote from @Russell Brazil:

Quote from @Emmanuel Ola:

Quote from @Russell Brazil:

Quote from @Emmanuel Ola:

Quote from @Russell Brazil:

1) What state are you in? Many states operate under Caveat Emptor and have no disclosure requirements.

2) These are probably not latent, or hidden, as a most jurisdictions have online permit and violation searches you can conduct. 

I am in California. The property is in California as well. Thanks for responding

 Question C15 on the California disclosure form asks if there are any violations on the property (at the time the form was filled out)

What is checked on the form you received? 

They checked NO, as shown in the snapshot below.

 I may have misunderstood something.

Are you currently under contract? If so, the title attorney is going to clear those violations.

No. I'm not under contract. I closed on the house already. I'm only showing you what the seller ticked on C-15 in the disclosure that we both signed. 

They checked NO, as shown in the snapshot below.