All Forum Posts by: Peter Mai

I just purchased a home w/ 5% down and now working on a new build ADU. I am financing the project with my own cash. My questions is: does anyone know of a strategy on how to finance the ADU in this scenario with debt?

I did some upgrades on the home which should bring the value up, in addition to the ADU. I'm expecting to have 15-20% equity when all is said and done, but of course that will vary depending how appraisers are valuing the ADU. Will lenders consider a cash out refi back down to 5% equity? Or is that not even a possibility?

@Julio Arana do you have any experience or knowledge of Santa Ana planning department approving an unpermitted ADU?

Does anyone know the average costs for all City fees for an ADU and/or JADU? Permitting, impact fees, etc?

I'm thinking about putting an offer on a SFR with a non permitted ADU built and would like to know what it would cost me to get it permitted. This is in Placentia CA.

@Joe Homs

Thanks for the tips! I might explore those routes as I build my experience in real estate.

@Matthew Forrest

Nice work! I’ll be sure to check out that post. Can you share your contractors info?

Hey @Matthew Forrest, thanks for the reply!  That's a great idea and will be something I look for as my search continues.  As of late, I have been targeting garage conversions as a cheaper alternative and have not though about the options you mentioned.  Do you have any before/after photos that you wouldn't mind sharing?  I would love to have a look at what you were able to create.  

@Alex Kim thanks for the reply.  

My current strategy is SFR+ADU+JADU as you mentioned above to maximize cash flows. Do you have any tips on how the construction of the ADU+JADU could be financed? Or is this not possible?

When do you anticipate a favorable shift in appraisals for ADUs, if ever?  

Anyone have tips on how to find off market deals in Orange County? I want to house hack using a FHA + build ADU strategy as my first home/investment property. I can't find any properties that will get me to cash flow upon completion of an ADU unit and renting out both units (after 1 yr occupancy requirement). At best I am calculating break even cash flows based upon CRMLS, Redfin, and Zillow listings.

First time home buyer here looking for tips. I want to utilize this strategy in the Orange County market, but I am running into difficulty in getting the numbers to work. I am targeting a SFR in the high 400s/low 500s - 3bd with a detached garage.

Since I have no experience, I can't be hands on with the conversion. I'm estimated around 80k all in. For now I am assuming total financing at 605k ($525k SFR + $80k conversion) w/ 3.5% down to have an all in monthly cost of $3600 (vacancy & R&M included) vs monthly rents of $3400 ($2200 for the 3bd 1000s sq ft SFR and $1200 for the 1bd 400 sq ft ADU).

I still need to figure out the financing part on the conversion.  I could finance it myself with cash, but if I leave that money in the property then it will reduce my monthly costs to $3300 w/ only a $100 monthly cash flow and 1.2% cash on cash return.  

Ideally I'd like to live at the property for 1-2 years. I'd live in the SFR until the ADU is ready, then eventually rent out both units. What holes do you see in my strategy and do you have any recommendations for this first time home buyer? Looking to take my first step towards financial freedom, like all of you vets out there! Thanks and happy holidays!!

@Drew Leo

Care to share which city this was? Also, will their loophole be voided once new state laws go into effect 1/1/20?