All Forum Posts by: Joseph Schmitt

I used renofi.com/to build my ADU last year and had an awesome experience.

@Will Barnard thanks for the reply! Please see below.

I own a 2bed 1 bath house [950sqft] in Los Angeles since 2019. I'm actively building a new structure permitted 1bed 1 bath [450sqft] ADU.

Economics -

House

Loan: $618k

Monthly Mortgage: $3.4k

Interest: 2.99%

Latest Appraisal: $710k

Latest After Renovation Appraisal (ADU): $865k

ADU:

Loan: $140k

2nd Monthly Mortgage: $700

Interest: 6% (interest only first 10 years)

Estimated Project Cost: $128k

Expected Monthly Rent: $2200 (starting Nov)

My current game plan is to rent the ADU out starting Nov, and transition the main house into a rental property by Feb 2022. The main house mortgage supports using the home as a rental after a year. And I'm thinking I can get $3500 a month in rent for the main house.

@Jon Schwartz love to get your thoughts!

Hello!

Part 1.5 of my ADU journey and progress since the original post.

I need some suggestions on

- Thoughts on current game plan?

- Next Investment move and style?

- Stay in CA or Philadelphia for next investment?

My first objective is to build a portfolio of rentals and unlock 10k of monthly passive income.

In my current position-

I own a 2bed 1 bath house [950sqft] in Los Angeles since 2019. I'm actively building a new structure permitted 1bed 1 bath [450sqft] ADU.

Economics -

House

Loan: $618k

Monthly Mortgage: $3.4k

Interest: 2.99%

Latest Appraisal: $710k

Latest After Renovation Appraisal (ADU): $865k

ADU:

Loan: $140k

2nd Monthly Mortgage: $700

Interest: 6% (interest only first 10 years)

Estimated Project Cost: $128k

Expected Monthly Rent: $2200 (starting Nov)

My current game plan is to rent the ADU out starting Nov, and transition the main house into a rental property by Feb 2022. The main house mortgage supports using the home as a rental after a year. And I'm thinking I can get $3500 a month in rent for the main house.

Thank you and appreciate any insights!

@Jon Schwartz let me know what you think about my last update/comments. 

Hey, Bigger Pockets!

Update on my ADU journey, and I would love to get a quick gut check on my numbers assumptions and any suggestions on possible blind spots.

I've officially wrapped refinancing two weeks ago on our primary home and have identified a contractor to perform our ADU garage conversion. Our contractor selection was based on a three quote process, based on online reviews, reference checks/onsite visits, and pricing comparison/services.

I've also identified a financial partner that will offer a 2nd mortgage program based on the after revenue value.

The next step is to put a deposit down ($6K) with the contractor to kick off design, engineering plans for permitting, and financing. Once plans have been completed, I can begin the official underwriting process for the 2nd mortgage. I'm in a unique situation where I need to pay the deposit to unlock the design and engineering plans to get the project's official financing approved. I agreed with the contractor that if financing does not meet my needs, they will refund 50% of my deposit and give me the design, engineering plans.

Number Overview - https://share.getcloudapp.com/...

@Jonathan Schwartz

Thanks for the additional insight.

Regarding the ADU the major cross streets are venture and shoup. The current garage is 480 sqft. The lot is large enough for the ADU to have its own yard. Looking on trulia the smallest apartment in this zip is a 600 ft.² detached house $2100.

Any insight on the smartest way to finance? And calculate ROI?

I have heard a range of prices for conversion from $80k to $100k. I plan on meeting with contractors to get an estimate this coming week.

Thanks - Joe 🏠

@Jonathan Schwartz

Thank you so much for the insight! This was very helpful.

To follow up on some of your mentions.

- The majority of the surrounding homes are at least three bedrooms but they’re ranging from $800k to $1m.

- Regarding The current economics of the mortgage. I agree there’s little to do with pulling out equity. One of the reasons the house was just re-appraise is because we were looking at refinancing with the rates dropping. We’re looking at saving $400 a month on our mortgage, drop a percentage point and the cost of refinancing $12k rolled into the mortgage.

- Thank you for the AUD info I will look into this. I was quoted around $100k for a full conversion. And also looked at a few pre-fabricated options.

-  In regards to the next acquisition the plan is $40k. Any thoughts on any of these scenarios?

- Acquiring a house outside of Los Angeles that better aligns with current budget? Or find alternative ways to finance this next property. 

Or other thought is:

-  Acquire another property in the Valley or South Bay due to cost. And rent this current property out for a wash or little cash flow.

Thanks again! Also happy to direct message.

Thank you

Joe - 🏡



Hello Bigger Pocket! 🎉

I would love some help and guidance!

I purchased a home in Dec in Los Angeles specifically Woodland Hills Ca. This purchase was not originally an investment, but my new goal is to use this as my first investment property.

Since I purchased the home I made critical updates like new roof, windows, new exterior paint and landscaping. Here’s a quick number overview.

Purchase: $650k

Mortgage: $611k

Exterior Appraisal last week: $660k

Updates $30k

2 bd

1 bath

Detached two car garage

House - 950 Sq. Ft

Lot Size 8,458 Sq. Ft

I've began my research and things like BRRR seem like a potential but I'm not sure the economics makes sense on this current home. I've looked into converting the garage into an ADU. Los angels has recently loosened up their ADU requirements due to the house in crisis in California.

I would love advise on the best strategy given my current situation and possible ways to finance.

My high level focus is building passive income. And would like to purchase my next property in Dec/ Jan.

Thanks in advance!

- Joe 🏠

Hello Bigger Pocket! 🎉

I would love some help and guidance!

I purchased a home in Dec in Los Angeles specifically Woodland Hills Ca. This purchase was not originally an investment, but my new goal is to use this as my first investment property.

Since I purchased the home I made critical updates like new roof, windows, new exterior paint and landscaping. Here’s a quick number overview.

Purchase: $650k

Mortgage: $611k

Exterior Appraisal last week: $660k

Updates $30k

2 bd

1 bath

Detached two car garage

House - 950 Sq. Ft

Lot Size 8,458 Sq. Ft

I've began my research and things like BRRR seem like a potential but I'm not sure the economics makes sense on this current home. I've looked into converting the garage into an ADU. Los angels has recently loosened up their ADU requirements due to the house in crisis in California.

I would love advise on the best strategy given my current situation and possible ways to finance.

My high level focus is building passive income. And would like to purchase my next property in Dec/ Jan.

Thanks in advance!

- Joe 🏠