All Forum Posts by: Marshall Robins

We can go up to 50% LTV as a private lender for what it's worth. I would be amazed, shocked even, if a traditional financial institution was willing to lend on a non-habitable asset up to 80%.

Adam - Thank you for the thoughtful response and my follow up would be to ask when you would consider a property "maxed out". In other words, how aggressive are you in recommending things like:

"Hey mr./mrs. Property Owner, you have an extra 1000 square feet with enough setback to add a 500 sqft ADU on this lot. I would recommend increasing revenue density this way, etc etc." 

The question behind the question is that I'm trying to figure out how to communicate with property owners that have under-utilized assets. So how do I socialize the benefit of doing something like taking a 200k ADU construction loan to add $X in top line and $Y after servicing the new note, but with an increased property value etc etc? 

Any guidance here would be amazing - thank you so much! 

This question is definitely very location dependent - licensing across state-lines is a tricky thing to navigate so depending on the size of the lender they may operate in one metropolis or all over the country. Really depends on what you're looking for, the nature of the project and again, location. 

Thank you Peter - I certainly understand the difference, and I'm seeing the same in my area as well. I'm happy to hear my experience isn't unique! 

I would have to imagine folks who are competent enough to represent this type of value-add are typically focusing on larger opportunities than small to mid-size SFR portfolios. 

 Happy to hear you're leaning into a more proactive role - with a single portfolio that large I'd imagine your insight will be appreciated. 

What's the breakdown in tenancy between the shops and any income from the barn (or the house)? 

In California, but can't imagine lending criteria changes all that much state to state - I see up to 75% ARV with a first time and I can usually give some wiggle room (~2-5%) past that if need be, but there has to be several successful projects with that borrower previously. Anything past 80% doesn't pencil on recourse for most HMLs.

If you’re active in California real estate or looking to break into the market, you’ve probably heard about Senate Bill 9 (SB 9). Signed into law in 2021, SB 9 is designed to address the housing crisis by allowing greater density in residential neighborhoods. For investors, it offers unique opportunities to maximize the value of properties and meet the growing demand for housing. Here are the top advantages of SB 9:

1. Duplex Development Made Easy - SB 9 permits property owners to convert single-family lots into duplexes. This means you can double the rental income potential on eligible properties without navigating overly complex rezoning processes. For investors, this translates into higher cash flow and improved ROI.

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3. Simplified Approval Process - SB 9 requires ministerial approval for eligible projects, meaning they bypass discretionary reviews that often involve lengthy public hearings and bureaucratic red tape. As long as your project complies with local zoning and design standards, you can expect faster approvals.

4. Affordable Housing Incentives - While SB 9 encourages new development, it also includes provisions to protect existing tenants and preserve affordability. For investors focused on socially responsible projects, this balance can attract support from communities and municipalities.

5. Opportunity for Value-Add Projects - Many California neighborhoods are ripe for value-add opportunities under SB 9. Investors can purchase underutilized single-family properties, split the lots, develop additional units, and significantly boost property value. This strategy aligns well with long-term hold and appreciation models.

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• SB 9 projects must comply with local ordinances, which may include design and setback requirements.
• Properties in historic districts or areas prone to environmental hazards may have restrictions.
• Lot splits under SB 9 require that the owner occupy one of the parcels as their primary residence for at least three years.

Conclusion SB 9 represents a significant shift in California’s approach to zoning and housing. For real estate investors, it’s a golden opportunity to adapt to market needs, contribute to solving the housing crisis, and achieve solid returns. Whether you’re a seasoned pro or a new investor, understanding and leveraging SB 9 could be the key to your next successful project.

Hey Team, 

First post here, so I really appreciate the patience! 

I'm curious to know how often property managers actively suggest value-add activities for properties (ie, building an ADU, remodeling, buy-fix-hold opportunities etc etc).

Any feedback here would be super helpful! 

Cheers,

Marshall