All Forum Posts by: Ramon Wilson

@Randall Demary Thanks for that idea. It would definitely make sense in the right circumstance. In this particular property the ADU would come from converting an existing garage which is a separate structure. The lot isn't really configured well for an addition to the existing building...plus that would be much more expensive that converting the existing garage.

@Dan Heuschele Thanks for this information. Very helpful. Have you heard of any strategies when building the ADU to make sure it is added in a way that will allow it to be property to get f/f loans?

@Trenton Miller good question. I'm not sure if adding the ADU would cause a default on the purchase loan. I havent even asked about that. What I was talking about is not having the ability to refinance with a conventional loan if an ADU is added.

I am doing a BRRR on a triplex and wanted to add an ADU to maximize the value of the property. I was told by the lender that if I add the ADU the property will no longer qualify for conventional financing. SFR's that add an ADU do qualify, but duplex, triplex or 4plex that add an ADU do not qualify for a conventional loan. Seems like a big con to adding ADU's on 2 to 4 unit properties. Is this correct?

I have heard from a couple of lenders that conventional loans are not available on duplex, triplex or 4plex properties that add an ADU (an SFR with an ADU does qualify for a conventional loan). This is not an issue of the property being considered commercial (ie, 5+ units), but rather fannie mae guidlines. If this is true then adding an ADU to a 2 to 4 unit property would require any future financing to be the much more expensive (eg, non-QM) and potentially limit the buyer pool if it was sold. Seems like a big con to adding ADU's on 2-4 unit properties. Is this correct?

@Jonathan Taylor Smith Any idea of their rates these days for 2-4 unit properties? Any suggestions for good lenders who lend in california?

I have heard from a couple of lenders that conventional financing is not available on 2-4 unit properties that add an ADU (SFR with an ADU can get conventional loans). I think you would have to look to non-QM loans for 2-4 unit properties with an ADU. If you can get a commercial loan, since the a 4 unit with an ADU would technically have 5 units, the pricing may be better than non-QM loans (although the term will likely be shorter). Please keep us posted as you get more information.

Thx. Sounds like better terms than I was quoted...

Would mind letting us know the basic terms you got. Loan size, ltv, rate and upfront points? i was recently quoted a great rate of 3.5% but with 3 points up front which seems really high for a conventional mortgage even if it is for an investment property...

@Wayne Brooks Makes sense. Thx for the info. Have you purchased from one of these auctions?