All Forum Posts by: Matthew Forrest

@Gilbert A. As Jonathan said you might not be able to convert the laundry room, but consider doing a small addition to get the square foot that you need. Also, if it is attached you might be able to take some space from one of the existing units or split one of the existing units to get more rent per sqft depending on the size of your existing units.

In my opinion your expectations for returns on both housing appreciation and stock market returns are aggressive at 5% and 15% respectively, but if your goal is to get your kids into a good school district while giving yourself the highest net worth then it almost doesn't matter what the returns numbers are. The fixed costs associated with home ownership in a $1MM - $1.3MM house in which you don't rent out any rooms has a very high probability of underperforming renting and buying stock or house-hacking (not sure if you can do that with your kids). I would rent and then buy stocks, bitcoin, or investment property.

@Zachary Perrin The best time to start was twenty years ago! The second best time is now. If you're going to be an investor and buying property for the rest of your life, does it matter if you buy a property at an intermediate peak? Do you think that property values are going to be higher to lower twenty years from now? If your answer is significantly higher like mine is, then I don't think you'll look back as see a property that got you started that you maybe could have purchased lower as being that important. My vote is always to get started as soon as possible.

@Indiana Eugenia Castillo Just curious, it looks like you live in Florida. Why wouldn't you want to invest in your own backyard? The demographic shifts are so strong there that I feel like I wouldn't need to look anywhere if I knew FL well.

I went to school in Bethlehem and the south side was an extremely strong student rental market.

@Cynthia Alexandra Sanchez Indecisiveness is tough! In the world of investing I think we are all struck by the struggle of having SO MANY good options, which is a great problem to have. Finding the means to start investing is going to be the chicken & the egg dilemma. Which comes first... investing to build capital or having capital to invest?! In my opinion, everyone needs to be investing. It's a low probability bet that you'll be able to build significant wealth by working and saving. Therefore, I think you need to do whatever is the most likely strategy to actually happen (no analysis paralysis or waiting for the dip) to get you started. If that's stocks, bitcoin, your FHA loan or investing out-of-state, all of those are fine. Just take action! If you decide you don't like the strategy you chose, you can sell and switch.

I purchased a SFH in 2018 with 10% down and completed construction of an ADU in 2019 with cash. As Dan mentioned above, when I went to refinance in 2020 (to lower my interest rate) the area had already appreciated with the market, but the ADU did not even appraise for my hands-on building costs. For me the overall returns have been great because I house hack and live for free, plus there has been strong market appreciation. I'm glad I was not relying on a cash out refinance since I doubt I'll see good market value for it for at least a decade.

Anecdotally I saw a post about a company offering a lending products that looks at properties based on DSCR. I have no experience with the product and have not looked into it, but I took note of it since it might be a way to pull more cash out of properties with ADUs.

@Ben Lue If its older then I doubt that it's a unit that was legalized under the recent "ADU" legislation. However, it's possible that it is still a permitted space. I would go down to the city and check the permit history to see if there is any information o the 350 sqft that you are referring to. If it turns out the that 350 sqft is not permitted as a habitable space, I would check out the El Monte ADU requirements (http://ci.el-monte.ca.us/Docum...) to see what you can do to get it permitted as an ADU if you want to rent it out. 

I would start with $50 rent reduction and move up from there to what you are comfortable with conceding. The garage will be worth a different amount to each tenant and some tenants wouldn't be willing to give it up at all (personally I would want hundreds of dollars per month). You should be careful to maintain tenant relationships during this so you don't rub them the wrong way during the eviction moratorium. I'd recommend checking out the book Influence by Robert Cialdini to figure out a good strategy for getting your tenants to give up the garages.

@Jose Leanos I completed my ADU in Oct 2019 and haven't see the property tax adjustment yet, but I do expect it to come eventually. My understanding was that the increase in taxes are related to the cost of the improvement.

I don't know the specifics of what is possible on your lot, but hypothetically if you're allow to have have fours traditional units (fourplex), then you could build two traditional units and then add two ADUs if you have the space. I've seen many posts on the forums about financing difficulties around 2-4 unit properties with ADUs. All problems can be overcome, but just something to think about. Example linked below.

https://www.biggerpockets.com/...