All Forum Posts by: Ricardo Paredes

@Randy P. Did you ever get a good answer to this? Working with a credit union on a refinance and they're treating rental income and debt the same way. Rather than just add 75% of rent income to income and PITI to debt they calculated a net income =75% of rent-PITI but then count the full PITI as debt.

@Manraj Singh In a best case scenario where the garage is attached to house with crawlspace where water, gas, and sewer can easily be routed to new unit, $30k might be enough, but $40k-$50k is probably more realistic. Cost will vary by city, but for a detached garage you're probably looking at a minimum of $50-$60k to legally convert to a studio. 

@Cirilo Villar I live in Gardena. You could live for very close to free in Gardena doing the following. Buy a  3 bedroom house with detached garage in the low 600’s. Rent 2 spare rooms at $800 each and convert the garage into a studio (~$1300 rent). Total rent ~$2900. The math probably also works with converting an attached garage or a larger house with adu and junior adu. 

@Salvatore Lentini Hard money lenders or lenders in general? I’ve had issues with hard money lenders not wanting to touch loans under $100k or even $75k, but last time I checked chase, BofA, Wells Fargo etc has no issue with loans in the $75-100k range. 

@Dajuan Taylor I'm not familiar with the Augusta market, but if the rent justifies the purchase price and cost of repairs I think it could be a good entry into investing. As other people have mentioned getting a loan for properties under $50k can be challenging, if the $10-15k worth of work you're anticipating is able to improve the value of the property by $25-30k then you could cash out refinance to get some of your money back and have access to more loan options since 70% of $75-80k would be over $50k. 

@ Dajuan is it a $50k house that's ready to rent in a neighborhood of other similarly priced houses or is it a $50k house that's in bad condition and is going to need a lot of work? I ask because a $50k that's ready to rent or doesn't need too much is probably going to be an easier way to get started in real estate investing. 

@Jimmy Chao I went through this recently with a property I had posted for rent on facebook. As previously mentioned depending on the property class it's likely that they have bad credit, an eviction, or low income and have had trouble qualifying for professionally managed properties. I found that by revising my ad to include a minimum credit score and no previous evictions within last 5 years I was able to greatly cut down on the number of people asking this question.

@Christopher Huang I'd start by narrowing your search. If you have $25k you're probably looking for a property that's at most in the mid to high 300's based on downpayment and reserves. That will help narrow down which cities and neighborhood too look in. It sounds like you're looking for a value add deal so I would target a property that has been on the market for some time and has cosmetic issues that you can fix yourself (ugly flooring, bad paint, outdated fixtures, etc). Ideally, you'd find a property with 2 bathrooms and a large detached garage that could then be converted into an ADU. We just started the process of converting our garage and i'll be posting on BP about it.

I think you've recognized that you have to tailor your analysis to the fundamentals of your specific market. We (wife and I) sold a rental property to a tenant with owner financing in 2018. The tenant was able to come up with a substantial down payment and we foresaw limited appreciation potential. Even with a modest interest rate, the ROI on lending him the balance of the purchase price is healthy. It's my favorite real estate transaction thus far. The monthly check is a little more than the rent and I no longer have to worry about upkeep on the property.

David, there aren't a lot of options in Taft. Byron Young (West Valley Real Estate) manages a large portion of the rentals in the area. I sell manage our SFR's in Taft, but I did buy some properties that were managed by his group and they were in very poor shape. That may be a reflection of the previous property owner's desires rather than his competency.