All Forum Posts by: Jerome Morelos

@Jerome Morelos

Yes. I want to add an ADU on top of my existing garage. I'm applying for the 2nd with Transportation Federal Credit Union. They offer LTV up to 95%.

How appraisers add ADUs to property values seems to still be a challenge. It'd be so simple if they just added the value based on square footage but they don't. Best general rule of thumb that I've heard as far as expected ADU value is you multiply what you can rent it for and multiply it by 100. So if you can rent yours out for 1500, your estimated additional value after ADU build is about $150,000. This obviously can vary but this gives you a good idea. That being said, every county has their own property tax rate. You have to find out what your tax rate is for your county and multiply it by your estimated after build value.

Yea the grant used to have that requirement which is why I steered clear. Like you, my rate is at 3.25%. Since the state only issued a grand total of 19 grants since the program started, they probably realized it wasn't realistic. So they just changed the requirements over the last week or so. You can qualify for the grant now even if you build your ADU with cash, a 2nd or HELOC, or a combination of both. They qualifies almost anyone assuming you meet the income requirement and they are pretty high so most should qualify.

@Jerome Morelos I have been using a HELOC for the past year to increase my opportunities for investing. The HELOC is on a different rental property that was paid off.

My HELOC had the ability to lock in the rate at any time for a $50 charge, so when the rates were about to jump I locked the rate in at a low rate and at about 28 years. This worked great for me. I could buy houses with cash and low closing costs and then lock the rate in for $50. I can also do this 3 times during the active period of the HELOC. It seemed like the best of option 1 and 2 you mentioned.

Hello you all. We have a couple SFR in Redlands. Most of which have ADU's. We also host meet ups monthly in the area sometimes at one of our ADU's. We are very will versed in the ADU area of investing. Please join us at one of our meetups and lets talk. I think I am allowed to share my contact info 909-754-0602. Full disclosure I am a mortgage lender and own a ADU company based out of Redlands CA

Strategic-conversions.com 

To answer your initial questions 

1. You would be required to pay both 1st and 2nd loans if you refinance  

2. The Grant is for preconstruction costs (plans/ permits/ etc) and they are going to be more creative as to how this money is disbursed in the future but no promises as of yet.

3. With our 2 car garages converted we saw on average about a $250/ year increase on taxes (not a big deal) Insurance about $10/ month once you disclose to them that you added an ADU

4. Its not so bad to refi cash out to build an ADU if the numbers make sense. I call it the BRARR method LOL. There are certain things to keep in mind if you plan on refinancing when it comes to the appraisal like keeping access to the main unit so the added square footage is calculated when they run comps etc. A lot of these things we learned the hard way!

Our company does 2 car garage conversions for around 65K and you can also sometimes do a junior ADU within the main house that cost a lot less (under 20K) So that could change your options a bit. But call me if we can help in any way and lets all get together and chat it up Thank you