All Forum Posts by: Naren Gunasekera

 Haha thanks. I'm prone to that.

 Thanks for the response. I'm probably just being paranoid that the lender will look at the appraisal and require that some of the more substantial issues will require fixing before closing. I guess since it's a condo and there aren't any structural issues I'm possibly overthinking that.

Thanks for the suggestion. I just did some research on it and unfortunately that probably won't work as my family member will be in another country. The logistics of him continuing to make those payments is a bit too risky.

Thanks for taking a look at my situation. Since they have an existing mortgage, would seller financing work? I was under the impression the house had to be free and clear for that. I haven't really looked at that option.

I have not had a contractor in yet as he just decided to retire but I am reaching out to get someone in for an estimate. The house hasn't been updated at all since around 2000 so it's completely out of date especially when I look at photos of similar sales in the area how their interiors look at. I was quite conservative when it came to estimating labour costs.

I have a somewhat unorthodox inquiry about a househacking/long term live in flip opportunity that I have. I was hoping to explore some options in terms of how to acquire the property.

For the last few years I have been renting a room in a condo from a family member. This family member is now going to retire and leave the country and offered to sell the condo to me.

The house is in somewhat bad shape and will require a full interior refurbishment. Back of the envelope calculation for this is 80k to 100k for redoing the kitchen, three bedrooms, replacing HVAC, first floor flooring, etc. I'm in southern California and trying to take into account the higher costs and pandemic bottlenecks in supplies. There's around 170k left on the mortgage. Condos are going for around 500-520k in my area for similar builds with reasonable to good updates. I have excellent credit, zero dti and have good income.

I might be able to get the home for around 250-280k because of the family angle and my family member's desire to move quickly. My quandary is how to fund it. I have about 20k if a down payment is required and the ability to borrow against my 401k for the repairs.

I'm looking at the following options:

1) A regular purchase through my credit union as a non-arms length purchase with a gift of equity letter. Concerns here are how appraisals look at things like kitchens with doors broken, rotten cabinets, etc., and time taken.

2) FHA 203k loan with refurbishment costs folded in. Concerns are the lack of lenders doing this kind of loan and lack of flexibility in choosing contractors and cost of the loan.

3) Hard money loan for purchase, use my money for the refurbishments and refinance once completed. I need to run the numbers on this but my main concern is lack of experience with this kind of thing. I have good cash flow with regard to income as I don't have any debt.

Has anyone made any similar purchases in Southern California and what approach did you take?

My long term goal is to rent the other rooms, reduce my living cost and use the additional cash flow to invest in RE and also potentially use a HELOC from the available credit as well for the same purpose. Potentially flip it in a few years as well (I'm aware of the cost basis issue with the gift equity purchase).

Thank you for reading my (quite long) question!

I'm late to this party but note that Civil Code Section 4751 renders covenants, conditions and restrictions (CC&Rs) that prohibit or unreasonably restrict the construction of an ADU or JADU on a lot zoned for single-family residential use void and unenforceable. This was an update to the State Law on ADUs that went into effect this year to prevent HOAs from stopping you from building an ADU. Note that this may need to be tested in the courts.

Note that some jurisdictions limit the number of non-related people who can live in one house. Check your HOA rules as well if you have one.

Be aware that a number of the homes that burnt down have substandard Fire Department access. It is currently up in the air whether the FD will require access to be brought up to current standards to permit rebuilds. In many cases the grading, widening required will be too difficult because of the topo and the difficult permitting process. I work in the land use field in this area specifically so if anyone has a deal they want some guidance on, please do reach out and I can point you on what to look out for.

My wife and I sat down and planned out our ideal life. We have families spread across a couple of continents so time with each, two vacations/year, some time dining out, etc. She plans on a remote job and I plan on consulting/photography/environmental work in different countries on short contracts. We figured a base of 85K/year, a better base of 120k/year and a truly safe passive base of 150k/year. We figured 10 years of working and saving 75-85% of our income and invest in Index funds and REI. Target is $1.5 million in Index funds and 30 doors. Lots of reading on Money Moustache, on here at BP and some podcasts from Choose FI allowed us to come up with this number.

@Logan Allec that's great to hear that you managed to house hack in Santa Clarita. How did you find that deal if you don't mind me asking? I'm a newbie looking to house hack in LA. I haven't started looking yet because I don't have the reserves but I was also thinking of leveraging the new ADU law (and my knowledge of land use planning) to do a garage conversion with a FHA 203k loan to house hack. All still in the beginning stages of planning though.