All Forum Posts by: Jamie Jeffredo

@Dan H. - Thanks for the suggestion. Every investor I have spoken to has only wanted to purchase the property, not partner with me. I would be open to this possibility, as it seems like the best option at this point in time.

I am new to Bigger Pockets so not familiar with the website. I have read articles, listened to a couple podcasts, and watched a few YouTube videos, but that’s about it. This was my first post. How do I find interested investors? Any direction would be greatly appreciated. Thanks again ☺

@Maxwell Ventura - Thanks for your input. The development potential for the property, and for the overall neighborhood, are the primary reasons why I am so hesitant to sell. I don't want to look back 5 years from now with regret and say, "If only I kept that property..." However, the neighborhood has not improved as much as I had hoped over these last few years. Prices have gone up, and many houses have been renovated and flipped, but the overall neighborhood feel is still a tad rough and rundown.  

I am hopeful my employment status will change for the better. I am educated, and have 2 college degrees. However, I worked in a specific field, and have sadly not found a lot of transferable job opportunities out there. My new income seems to be the biggest downfall for all scenarios... With limited income, I most likely can't refi, can't take equity out, can't get a new loan (so would have to purchase next property with cash from profit), and can't build. 

I currently have a conventional loan on the property. I previously looked into a construction loan, and a hard cash loan, back in 2019 for the purposes of building. Based on the RM3-7 lot, it seems traditional dwelling units are really the best option for maximizing the property's potential. The big question is whether I will one day be able to build the units, or if I should sell the property, take the profit and reinvest, and let some investor/developer maximize the potential on the lot. 

@Mark Frattini - Due to the drastic decrease in my income, I don't believe I will qualify to take any of the equity out. I have not looked into it, but was doubtful this would be an option. 

I used the home as a STR from 2015-2020 and was very successful prior to Covid-19. However, my neighborhood cannot bring in the amount of reservations nor nightly rate I once had without the San Diego Convention Center up and running. These events made up the majority of my bookings. The neighborhood is transitional, and it was only my proximity to the Convention Center and downtown events that made the location work. I cannot complete with beach areas, and nicer neighborhoods in San Diego.

When the STR ended, I moved home. I could easily rent out my house for more than my mortgage payment, but I would be paying approximately the same amount in rent that I would be earning. So I'm not sure that scenario works either.

I wrote a little about the ADU option in my last post. I am not sure an ADU makes the best use of the property and zoning. If I can't afford to build additional dwelling units, having the option to do so may be the most valuable part of my property. It is why I purchased it, and what most investors seem to be interested in. My neighbor is also interested in selling, so if both lots were combined, an investor could tear down both SFRs and build up to a 16 unit apartment building. The property is located in an Opportunity Zone, which I believe is very desirable for many investors.

If I sell, I will profit ~$500K that I could use to purchase a multi-unit home. Unfortunately that property would be out of state, as I am priced out of my own city. I don't plan to move, so I would become a renter once again, and would have to hire a property manager to assist with whatever multi-unit I could purchase. If I hold onto it, building opportunities may arise in the future, or they may never happen. To sell or not to sell.... I just don't know what the best option is for me. Passive income and financial freedom are my long term goals, but I don't know what option gets me closer to my goals.

@Dan H. - I understand ADU laws are constantly changing and keeping track of them all is challenging. I have not been to the city since early 2019. At that point, an ADU was not an option on my property. I didn't just google it. I scheduled many appts (in 2014, 2015, 2017 and 2019) with a zoning rep from the City of San Diego Development Services Department, and was told this information time and time again. It appears I need to go back to the city, since it has been a few years, as it seems things have changed. Thank you for the info.

Honestly, I don't feel adding an ADU on the property really maximizes the lot or zoning potential for my property. I purchased the property because I knew I could have a minimum of 4-5 extra units added. If I were to sell now (as is) the potential is still there for the next owner or investor. Per my Real Estate agent, this increases the property value. If I hold onto the property, and add more primary dwelling units in the future, the property would be worth significantly more than it would be with the existing house and ADU. Which is why I am conflicted about selling. Prices are very high right now, so I could potential make enough off the property to purchase a duplex or triplex in another state in cash, and have passive income immediately. I cannot predict my future income, or what opportunities may arise over time to build on the lot. Although an ADU may be doable at this point in time, in may not be the best option for this property.

Thanks once again for your insight, advice, and knowledge. 

@Dan H. - I don't know what to say. I have gone to the city permit dept many, many times over the last 6 years (all pre-covid). I spoke to them in person, and at length, about my options. I tried to get a permit for an ADU back in 2019 and was denied. The city permit rep flat out said, "ADUs are for SFR on lots that do not allow for multiple units. You are zoned for multiple units, so cannot have an ADU." So unless something has changed, I am not eligible to build an ADU. I was told I had to do a regular build on the property, which of course cost more for permits.

Thanks @David Birkey. I liked what @Tom Scott wrote also. However, I'm still not sure what the best course of action for me is. I will continue to examine all my options, and see if there is a clear direction that gets me closer to my goal and dreams. 

Thanks @Bruce Woodruff - I appreciate your advice, and agree that CA is not a landlord friendly state. When I consider selling, I do look at locations where I could possibly purchase another home to do STRs again. I was very successful with Airbnb, and made much more income than I would have with a traditional renter. *Side note - my father lives in Prescott. I visit every year. Love your town. 

@Tom Scott - Thank you! I really appreciate your reply. To answer your question, my goal or dream is to have passive income so I don't have to work a 8-5 job until I am old enough to retire. I want to travel and enjoy my life now. I was luckily enough to buy a condo, and make enough profit off that remodel to buy this property. From day one I knew it would be a long term goal, and I gave myself 10 years to build the additional units. 6 years in and I am feeling a tad disappointed that I am not any closer to that goal. I was making good money off the home, using it as an Airbnb. It allowed me to make many upgrades to the property, including a new roof, solar, AC, remodel the interior and updating the landscaping. However, Covid-19 ended that income stream. The current rent for the neighborhood would barely cover the mortgage and utilities, should I opt to do a typical rental. With the COVID-19 Tenant Relief Act, being a landlord doesn't sound overly appealing today. I have been approached by investors in the past. One offered me hard cash for the build but wanted 10% plus repayment at the end of construction, and I wasn't sure how I would pay that back if I didn't sell the property. Another investor offered to fund the build, with a long term payback, but wanted a significant portion of the property. I believe they asked for 40% upfront with an ongoing increase in equity each year. I am new at this, and really don't know the best way to get to my goal/dream of having passive income. I see so much potential in this property. I just don't know how to get the potential to become a reality. Do I hold out, and stay true to the original plan? Do I look for more creative financing and investors again? Do I sell and try to find a better income property to focus my time and energy one. I'm confused. 

Thank you all for your responses. I knew I could find valuable input from this group. =) 

Thank you @Greg Scott for your advice. I agree that CA is not a landlord friendly state. However, this is where I currently live, so I was hoping to make the current property work for passing income purposes. With the COVID-19 Tenant Relief Act, being a landlord sucks here. I have looked outside of CA to invest the profit, should I sell, but worried about the additional management fees I would incur in that type of situation. 

@Twana Rasoul - Thanks for your opinion. However, I am not allowed to add an ADU to the property. Due to the neighborhood zoning, and the fact that I can build multiple units, I am not eligible for an ADU. I have spoke to the city permit dept many times about my options - an ADU is not one. As mentioned, the long term goal was to build 3 additional units. The cost to build is $800K to $1 mil and I'm not sure the neighborhood rental rates would cover the construction loan (which I cannot get at this time due to my income situation).

@Account Closed - Thank you for your reply. I will make ~$400K plus if I sell the property today. The goal when I purchased this house, was to have a 4 unit passive income property. I knew the neighborhood zoning allowed for additional units. However the cost to build may outweigh the current potential rental income. This is why I have been seriously considering selling the property, to take the cash profit and invest in something that is already build and currently bringing in income, vs trying to figure out how to finance the build. As for my "disability" it merely impacted my return to my prior career, reducing my income significantly. Changing careers during a world-wide pandemic was not ideal. That is why I am hesitant to give up the property. Until I secure a new job, and return to my prior salary range, I will be very limited in the loans I can get to build on the current property or the loans I would qualify for should I attempt to buy property elsewhere. Even if I paid cash, $400K isn't going to go far in SoCal, so I would be limited in what properties I could actually purchase. FYI - AZ is the state I have considered buying in, as I have friends and family there, plus it is a doable drive should I need to spend some time out there renovating the property. 

Hello. I am a newbie to the group. Looking for advice - Do I Sell or Hold?

I own a home in San Diego CA. I purchased the house in 2015, in a transitional neighborhood for a low price, and the value has since doubled. Houses across SD County, and in my neighborhood, are consistently selling for $100K over listed price. My house is small, only 1000 sq ft. But the lot is 7000. I bought the home because the neighborhood zoning is designated RM 3-7 (Residential-Multiple Unit ‘medium density’). Therefore, this property would permit up to 7 dwelling units, up to 3 stories in height. The plan has always been to build 3 more units on the property, and create passive income.

The house is located 1 mile from the city, and from Petco Park (our baseball stadium). Flippers have been buying/selling in this area for the past year or two. Unfortunately, the neighborhood is still a bit ‘rough’ and not improving as fast as I had hoped. Current rental prices, although high if compared to other states, is relatively low in my neighborhood (as compared to other areas in San Diego). *The house was previously rented out on Airbnb (very successfully) due to its proximately to the San Diego Convention Center (1.9 miles away) but Covid has temporarily ended this.

Due to a recently work injury, I had to transition careers, and unfortunately took a significant pay cut (over 50% decrease in salary). Therefore, I am not in a position where I can afford to add additional units on the property, nor get a construction loan. The estimated cost to build 3 additional units is over $800K.

So the question I have is… Do I sell the property now, while the prices are high, and take the cash and invest somewhere else? Or do I keep the property, and hold onto it, until I can afford to build the additional units?

The idea to sell is very tempting. However, I will be limited in loan availability (even with a large amount down) due to the decrease in my income. My long term goal is passive income. I just don’t know if I would be better off to sell now and use the profit to invest in other low priced homes outside of San Diego, or to hold onto the property and look for future opportunities to build on the land.

Any advice from investors or those with passive income is greatly appreciated. Thanks in advance.