All Forum Posts by: Marty Friedemann

Properties will be in and around Los Angeles

I am searching for a long term relationship with a lender who will use an income based approach to refinance SFRs with ADUs. The reason I am looking for the income based approach is because there are such a limited amount of ADU builds that have sold that comps are not available. Ultimately I need a lender who can provide refinancing on SFR with ADU builds for my BRRR strategy. Any advice or suggestions are greatly appreciated.

Sent you a DM. Thanks for the help. I will reach out to the bank. If you can think of any lenders that use the income approach on SFR rentals please let me know.

I am searching for BRRR financing in LA. I have a large line of credit and need a refinancing option after the ADU is completed and both the front house and ADU are rented at market rents. With the addition of the ADU properties will have strong cap rates. Using commercial lending models (using rents instead of comps) I am hoping it won't be a problem to get the value to refi out of the property and pay back the line of credit but not sure if thats realistic.

Any suggestions on a refinancing option would be greatly appreciated.

Hi Nicolae,

     Leverage would typically be a bank loan or perhaps some other form of debt or equity. The idea would be that if you use less of your own money, you can do more deals at the same time, and grow your business faster. However, more leverage means more risk. It is certainly something to look into.

Hey Nicolae,

       Your situation looks good to me. I am not familiar with the New Orleans area, but assuming a 30% expense rate, your situation is sitting at an 8 cap unlevered. With leverage, you are going to make a much higher return. If you can't find 8 caps on the existing market, then building it yourself might make a lot of sense. 

       In regards to appreciation, I was taught to never trend development. The deal has to make sense today for it to be a good deal.  It is a conservative approach, but it is also safe. The industry standard for rental appreciation is 3% but you can check the government appreciation rates for your MSA on https://fred.stlouisfed.org/

Investment Info:

Single-family residence fix & flip investment in Burbank.

Purchase price: $654,000
Cash invested: $145,000
Sale price: $941,000

We bought this property at foreclosure auction. Unfortunately, the former owners leased the property to someone right before the foreclosure and we lost a lot of time and resources fighting a legal battle. Once we got possession of the property, we had to reassess our situation. We decided to essentially refresh the property and clean up the damage that the tenant had done before leaving (large holes in walls mainly). We were fortunate that we purchased the property at the right price and we were still able to make it out ahead.