All Forum Posts by: Oscar Miguel

Hello everyone, I have a small parcel with a stick-built duplex in Southern California.  There is empty land on my parcel that had a mobile home many moons ago.  I hate that it's just barren and wasted space, and the city agrees that they would like for me to develop it.  They said that as long as I bring in a modular home that is 1976 or newer, that they will fast track permits for me.

So game on, I now have a potentially affordable way to create more cash flow.  BTW- property values don't increase very much and rents aren't going to be much more than $750 at best in this small town, so financing something new is not feasible.

So I'm taking the advice of the podcast and reaching out to the community for any advice or perhaps introductions.  

I'm looking for help in where I could potentially buy one, how to arrange for transport, any permitting for transport or government auction maybe?  Any advice or pointing in the right direction will be greatly appreciated.  Honestly, I'd be happy to pay a finder's fee if someone in the know would be able to help me get this going and avoid some of the rookie pitfalls and expenses.

Cheers all and thank you!

Oscar

 I was just wondering the exact same thing!  I'm still very much a rookie and even more so for out of state investing.  I've been listening to Clayton for a long time on YouTube and his podcast...it wasn't until I was ready to give him a call that I came across your and Mark Ferguson's information that I found out about his shady practices. 

I felt so sad for the people that still invest and come out on his podcast to try and give him legitimacy, sad that I'm feeling like I have to take steps back again and rethink if/how I can invest out of state, and annoyed that I watch Jerry almost daily and now find out he's still affiliating with CM!!

 What a great response!  For example, I've been reaching out to so many of my friends and family to chase down $80k-$100k for some deals I've been working on lately.  Points and interest rates being so much better than losing their investments or in a savings account getting 0.05%.  #iQUADRANT !!!

Hi Jake, I'm pleased to have come across your post.  I'm also doing something similar in IB, and the more of us do this (legally) the more comps will be available to help us with valuations and also in working with the city.

I want to start by saying that the City of Imperial Beach has been very good to work with. I did a lot of research last year/early this year on ADU as I knew it was what I wanted to do with my property. I was ahead of the city in knowledge and they have been great to work with and have addressed items I didn't agree with in a very friendly and non-confrontational manner. I sometimes work with city planners for my W2 and that's not always the case!

Few things that I've found out from going to ADU conferences, speaking with multiple professionals in person, on the internet and here in BP:

*Accurate comps for ADU's are going to be slow-moving, but will eventually catch up and help. Much like solar back when it was new.

*Electric hasn't been an issue.  The power company just wanted an address for the new work order, and the city was quick to provide the new address.

*Water in IB could be tricky.  I was quoted by the water company that it would be upwards of $5k to tear up the street and bring a new water meter.  Because of this I will be tapping to the main house and installing a sub-meter. I'll either pay water once  I move out, or I'll back bill the tenants based on their usage.

*I will include a link to a recent post I put in BP talking about what I just found out about refinancing. It will have to be cash or portfolio until guidelines change...as of right now, it won't be touched by traditional lending if it's a duplex or more AND has an ADU.

*Adding an ADU will not change the property type. So if you have an SFR and add an ADU, it will remain SFR. Same with Duplex or Multi-Family. I don't want to go on a tangent but in the ADU conference I went to, a congressman that helped write the bill explained that 1-4 unit "residential" properties could have as many as 8 total independent living spaces with the current laws.

I hope this helps.  Congrats on your project, I'm hoping to be done with permitting soon.  Here's the link to the topic I started recently:

https://www.biggerpockets.com/forums/432/topics/825864-refi-issues-when-adding-an-adu-to-a-duplex-in-ca

Oscar

I am by absolutely no means an expert, but I did recently use FHA to buy the duplex I am currently living in.

One thing that was brought up often is that when trying to qualify for FHA, they will look into what size/type of residence I'm moving FROM when considering what they will finance. So if I'm living in a spacious 3bd/2ba single-family residence on 1/4 acre...I will have a hard time proving that I will actually move into a 2bd/1ba unit on a 2-4 unit parcel. I believe they do this to help minimize people using FHA as a means to conduct business and that they will actually move into the property, and that could make it difficult for the loan to be sold.

I hope this provides some help on that front.

Cheers!

Absolutely @Account Closed , that's plan!

 Hi Cesar!  I reached out to 7 or 8 contractors.  Many didn't even return my call or email, it's crazy how busy they were.  Those that did return my call were quoting $80k-$100k for a 575sq ft build within my garage.  I hired an architect for the design.  It shouldn't have been that high (for my particular application), so I'm going to build it myself.  Going through permitting at the city right now.

FWIW, in SD, paying the $80k-$100k would still be worth it.  

@Matt Devincenzo Rock on, thank you for the input. While it puts a damper on what I was hoping to do...I feel it makes sense to continue with the ADU and hope that in the future someday I can refinance out of the FHA. I'll have to save up for a bigger down payment for the next move.

Thank you!

Thank you @Chris Mason.  Is this something that you think will change in the future as ADUs become a more common item in the consumer arena?

So my take from this is that once I build this; I will likely not be able to refinance out of my FHA. Thus, for my next purchase I will need to find a different program...

@Matt Devincenzo

Awesome Matt, now we are talking!  Thank you for chiming in and lending a hand with your expertise.

My property is in Imperial Beach and zone is R3000. I have two dwellings on a 7300 sq ft lot so I do not believe I can make this lot a triplex. Unless I join the two detached dwellings and make it a multiple-unit dwelling (I think), but that would entail more construction costs and remove some of the ease that the new ADU bills provide.

So it sounds like if I add the ADU to one of the detached units, leave them as detached units...I may be out of luck with financing. Until lending guidelines change?