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All Forum Posts by: Rick Garrido

Rick Garrido has started 0 posts and replied 18 times.

Post: How to split utilities in a JADU

Rick Garrido
Posted
  • Investor
  • Long Beach, Ca.
  • Posts 18
  • Votes 10

The JADU can be separately metered for all utilities if your city allows it. 

The gas and electrical meters can be separate from the main house. You'll typically ask for it when you're requesting permits to modify your home to have the JADU.

You can "sub meter" the water instead of installing an actual water meter. The sub meter costs and monthly reporting fees can be charged to the JADU. It will determine how much water went to the JADU and send a bill to the JADU. 

HVAC can be a bit trickier depending on where all the equipment is running. Since you're stating the living room is being taken up it may change the whole situation. I'd have your contractor take a look at that as they are working on the JADU. May be better to get a mini-split installed in either the JADU or on your side.

Good luck!

Post: 1031 rules and taxes

Rick Garrido
Posted
  • Investor
  • Long Beach, Ca.
  • Posts 18
  • Votes 10

First, you should speak to your CPA about this. From my experience, a 1031 doesn't necessarily pay attention to the amount of equity you have in a home, just the sell price. You sell property "A" at 1mil you can buy as many properties as you want that amount to 1mil or more to not pay taxes. It's a like-kind exchange so you can technically go from SFR to multi family or commercial since it's under a real estate umbrella. The rules regarding the 45 days for identification of future property and closing within 180 days still apply so as long as you close all the properties within that time you should be fine and pay no taxes for the 1031 exchange.

Good luck!

Post: Tricky question about HELOCS and retirement account loans

Rick Garrido
Posted
  • Investor
  • Long Beach, Ca.
  • Posts 18
  • Votes 10

I can't tell by the numbers but would definitely recommend a CPA. As a separate option, why don't you look into moving your retirement account(s) into a self directed IRA account (SDIRA) ? You can then use it to pay some/all of your loan on the STR since it's not your primary home. I invest with my SDIRA and while it's a bit more hoops you jump through (you have to be arms length away from the transactions, can't use "disqualified" parties etc.) it's worthwhile if you're going to put it into real estate. Speak to your CPA about this and also ask them about "converting" the funds to after tax funds so you can plan ahead of the conversions.

Good luck!

Post: Big Bear STR

Rick Garrido
Posted
  • Investor
  • Long Beach, Ca.
  • Posts 18
  • Votes 10

You can hop on the County website and verify the information online. You should assume whatever the county says is correct unless the Owner can show they recently got the additions permitted. I've gotten a few good deals by confirming the additional beds/baths are not permitted as I buy it at what's actually permitted and go through the hassle of getting the rest permitted myself. This can include opening some walls here and there so the inspector can check if everything is built to code, then you repair or tear down depending on what they find. Selling would also be a hassle if it's not permitted since the next buyer will go through these same motions. Good luck.

Post: How To Go About Finding Reasonably Priced Contractors For Flips

Rick Garrido
Posted
  • Investor
  • Long Beach, Ca.
  • Posts 18
  • Votes 10

Orange County is expensive so finding someone cheap is not going to be easy. If they are cheap, they are likely cheap for a reason. Also, everyone's idea of "reasonable" is relative. My contractors provide a great value which is why I use one or the other depending on the work. I factor those prices in my costs for flipping. Sometimes I'm off my numbers but generally speaking you'll get better as you go so consider this a cost of learning the business.

If you want to find someone "reasonable" I'd go to local meet-ups and ask around for contractor recommendations. Talk to adjacent counties or at the least expensive neighborhoods in the OC (Stanton, Santa Ana etc.) and see if they have contractor recommendations. 

Good luck!

Post: Southern California Investing

Rick Garrido
Posted
  • Investor
  • Long Beach, Ca.
  • Posts 18
  • Votes 10

It depends on what you're willing to do. First, I'd recommend getting to know what different avenues you have such as wholesaling, buy and hold, developing, "house-hack", etc and seeing what you're comfortable with. For particulars, you to invest in the desert areas driving distance to SoCal as you can get into them with 30-40k. Alternatively, you can wholesale and use that amount to start marketing. Best thing you can do, if you're in the learning stage, is to partner with someone that knows and have them teach you. Take a little return (or work for free) while you get mentored and catapult yourself into the game. 

Good luck!

Post: Vacant Property - Quality Tenant applied wanting to move in 2 months from now

Rick Garrido
Posted
  • Investor
  • Long Beach, Ca.
  • Posts 18
  • Votes 10

I take the same approach with my rentals. If someone wants to put it on hold then they begin to pay rent as-if they moved in. If they don't want to pay then you keep it listed in case another qualified tenant can move in. 

Good luck!

Post: Permits and Fees for ADU garage conversion in LA, CA

Rick Garrido
Posted
  • Investor
  • Long Beach, Ca.
  • Posts 18
  • Votes 10

You can go to the City to confirm but I'd assume the  architect is correct with the timeline and potential costs. 

70k for windows and doors sounds like more than enough. If you're also adding plumbing, electrical, a bathroom and a kitchen then I'd say it's not enough. We convert garages or add ADU's on as many properties that make sense and at $70k for a 2 car garage (assume 20x20sqft) that's only $175 per sqft which no licensed contractor would do it for here in Cali. So for doors and windows that's more than enough. For an ADU conversion that's way too low. If you do find a licensed contractor at that price send us their number 🙃

Good luck!

Post: Multifamily/apartment building w/ retiring father AND room mates AND potential child.

Rick Garrido
Posted
  • Investor
  • Long Beach, Ca.
  • Posts 18
  • Votes 10

Personally I'd go into the owning the property with my spouse and my dad only, not my buddies. It never really works out. If you form an LLC (or entity) to own the property that's the best way to go in with buddies but honestly it may become more of a headache. I try not to mix friends/family and business, history usually proves it doesn't work out. You'll know your situation the best. On another note, the whole paying into the property should be on top of the required mortgage otherwise you end up paying a higher share since you have the money down upfront.

For buying a property, the best way is getting a multi-family (4 or less) but like it was mentioned previously you're not likely to find a multi-family with enough vacant units. You'll be dealing with evictions and in-between housing so it becomes a headache especially if you're starting out in real estate. If you go for more than 5 units you'll get into commercial lending so you'll be looking at 30% down or so and in LA for a commercial property that wont be cheap. 

Now-a-days the numbers don't really work unless you buy off the MLS and/or you add more housing to the properties. Based on that I'd recommend: buying an SFR with as little money down possible (3.5% FHA or low conventional) using the remainder of the money to build a JADU and an ADU (specialized ADU lender for the remaining amount needed to build the units). The JADU would be rented to pops and the ADU (or main house) would be rented to my buddies. That way everyone can stay put while you get those units built. LA is pretty friendly to allow those additional units but obviously you'd need to verify that specific area allows it depending on where you want to live. I know it sounds a bit much so PM me if you have a specific location and I can see how I can help you identify places where that works. Otherwise the next route would be going for that multi-family route and vacating the units. Or buying a large house with enough restrooms where you can put dividers up to separate the space and/or upgrading the garage to an ADU.

Good luck!

Post: Air BnB Rentals in LA (Are they here to stay?)

Rick Garrido
Posted
  • Investor
  • Long Beach, Ca.
  • Posts 18
  • Votes 10

Los Angeles has many STR's but it's definitely not the best market for them since the regulations continue to get more strict as time goes. If you take over the company that has good cashflow that's a good indicator but it would be good to vet those properties out by making sure they have the appropriate permits to operate legally.

As far as new owners making money you'd have to look at the City's on an individual basis. As a previous poster stated, LA is fairly strict on the regulations so it's not the best market for new STR's. I'd recommend joining a local STR group and talking to some folks there.

Good luck.