All Forum Posts by: Jerome Morelos

Quote from @Mario Stowers:

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

@Nicholas Coulter Wow that's great. How much rents are you getting per room? North or South Redlands? Yes that was my initial plan, to rent this property out and purchase another primary residence. 

@Nicholas Coulter That would be great, thanks. How many bedrooms are you renting out? 

What's holding me back from the ADU is I won't be able to tap into equity of my home anymore since its tied with the second home mortgage.

Hey BP, does anyone have any experience with financing ADU's? I am thinking of financing a garage conversion ADU on my primary residence. I have been researching different loan programs and Renofi stood out to me since they will lend based on the ARV of the home (90% LTV). ADU cost would be around 95-100k, monthly payments ~$800-$850. Projected rental income for the ADU would be $1,500. That along with renting out my primary residence would give me a net cashflow of about $700 (which is great in California).

Questions/thoughts:

1) If I decide to sell or refinance a home with a secondary home loan, would I be required to pay it off in full? 

2) California is offering a 40k grant to build ADU's using a qualified CalHFA lender. Only issue is most of these lenders require you to refinance your home which I want to avoid. But they are in the works of expanding to different loan programs that don't require you to refinance. Is it a good idea to wait for this to take advantage of the grant?

3) Will my property taxes and insurance increase from the garage conversion ADU?

4) Completely throw out the ADU idea and just open a HELOC against my primary residence to buy a second investment property.

Definitely LVP. High wear layer and thickness as mentioned above. I buy mine from Floor & Decor called Duralux. Paid around 2.25/sq ft. Cheers!

Quote from @Account Closed:

@Jerome Morelos it’s up to you. Having a texture like this is the norm in many places. I’m in Denver and knockdown texture is common. Doubt renters will care, so I’d save the money. Probably something more useful to do with your hard earned cash. 😊

Good point. When looking at rental comps, it’s hard to tell from pictures because you could really only see it up close. I think I will just keep it. Maybe in the future I will retexture. Only problem is my kitchen has smooth walls unlike the rest of the house. 

Quote from @Mike Jay:

100% have them skim coat it. You want it smooth like new drywall

How much does that typically cost? The whole house is pretty much textured like in the pictures.  

Interior painting in progress and my painter sent me these pictures. What are you thoughts on the textured walls? Leave it or pay more to smooth it out? This is an older home built in the 1960’s and will plan on turning it to a rental in the future. 

Thanks guys! You’ve all been very helpful! 

I think contact vinyl paper inside the cabinets would be a great idea. I’ll look into that. Thanks guys!