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All Forum Posts by: Clarence Johnson

Clarence Johnson has started 8 posts and replied 285 times.

Post: Building an ADU in Inglewood CA

Clarence Johnson
Pro Member
Posted
  • Real Estate Agent
  • Inglewood, CA
  • Posts 294
  • Votes 150
Quote from @Clarence Johnson:

I have no development experience but 2 clients have built permitted ADU's in adjacent LA (90047), and both were under $130k, with your quotes a 800 sq ft ADU would be $200k. What is your ultimate goal, are you selling the property or renting? Also, whats the current use of the property as I spoke to Inglewood planning officials to inquire about doing an ADU or additional unit on a R2 lot, with the existing use being a duplex, and they gave me a hard no to both.


 Got my yes.

Post: Rent Control Law Inglewood California Availabe for Rent

Clarence Johnson
Pro Member
Posted
  • Real Estate Agent
  • Inglewood, CA
  • Posts 294
  • Votes 150
Quote from @Kevin Breslin:

The code I have been quoted says 
"Whenever any person, whether as the owner or agent for the owner,
rents, leases or has available for rent or lease, one or more residential
units, such person shall be deemed to be in the residential rental
business." I've asked if there for clarification or further rules for "avilable for rent" but the city employees say that is the only rule.

I was looking for help with LA county and CA state law if anyone had a direction to research.


They now have an exemption process, not sure of the exact standards for it but I exempted my ADU recently.

Post: Using FHA, USDA, or 203k

Clarence Johnson
Pro Member
Posted
  • Real Estate Agent
  • Inglewood, CA
  • Posts 294
  • Votes 150

Heloc any existing properties with sufficient equity, use a 10% loan program out of state for a vacation home, it beats 20-235% for an investment.

Post: Sell or Keep property-Inglewood

Clarence Johnson
Pro Member
Posted
  • Real Estate Agent
  • Inglewood, CA
  • Posts 294
  • Votes 150

Midterm and long term rentals in that area are doing well, we are midterming a 1 bedroom for $3000 and renting 2 bedrooms long term for $2700-3000. I vote hold, and build an ADU.

Post: SB 567: "Just Cause" Eviction using "Substantially Remodeling the Unit" in LA County

Clarence Johnson
Pro Member
Posted
  • Real Estate Agent
  • Inglewood, CA
  • Posts 294
  • Votes 150

Its not common knowledge but Inglewood has its own rent control ordinance with a lower barrier that substantial remodel.

Post: Looking For Multi-Family Investment Agent

Clarence Johnson
Pro Member
Posted
  • Real Estate Agent
  • Inglewood, CA
  • Posts 294
  • Votes 150

Hello,

I actually started my investment journey house hacking in Inglewood and share with clients how to do the same, usually with long term goals for ADUs etc when there is sufficient equity.  I would suggest exploring using a 401k loan as downpayment, we have lenders with access to downpayment assistance programs but there are typically income limits or higher rates than are counterproductive to getting assistance if your paying $1500 more a month.  When you say you don't have much saved, I think we need more context, most loan programs we use for 3-4 units require 5% down, so your ideal savings rate will be around 5-7% of the avg purchase price in the area.  You can represent yourself and use commissions towards closing cost, but I would also warn that depending on your experience you may benefit more from having someone who has been  around the block advocating for you.  Given your stronbg income, I always advise pretending you have a mortgage and paying it into your savings, even if you do not intend to may more than $1000 things happen and repairs pop up so you will need and want reserves.  Stay the course, reach out if needed!  

Post: Refinancing after building an ADU

Clarence Johnson
Pro Member
Posted
  • Real Estate Agent
  • Inglewood, CA
  • Posts 294
  • Votes 150
Congrats on the build, I built an ADU in Inglewood around 2020 as well.  Heloc is your best bet for preserving the primary rate and for flexibility in payment and liquidity in the future.  Unfortunately, ADUs do not add as much value as most people think, I jokingly say that appraisers look at them like a giraffe in the yard, they are worth something but they arent usually giraffe experts.  On the sales side our buyers have benefited from this as appraisals for SFRs with ADUs tend to come in low, we shrug our shoulders and get a price reduction.  As lenders are allowing use of ADU income I think the value add component will increase but for now they are cash cows.  Our 400 sq ft 1/1 is leasing at $2700 with midterm tenants, definitely consider this to avoid Inglewoods STR registration and to increase cashflow.

Post: Investment Strategies in LA

Clarence Johnson
Pro Member
Posted
  • Real Estate Agent
  • Inglewood, CA
  • Posts 294
  • Votes 150

House hack a small multi using an FHA loan, add income/value with an ADU. Move and repeat adding HELOCs as you gain equity to later invest out of state, locally or passively in a syndication. Look into cost seg to offset taxes and still be able to purchase down the line.

Post: CA ADU build progress pics, costs&anything else you want to know

Clarence Johnson
Pro Member
Posted
  • Real Estate Agent
  • Inglewood, CA
  • Posts 294
  • Votes 150
Given the rate increases have you considered a heloc?  There are a few options fie investment property that would allow you to keep your existing rate and give you some flexibility with the funds.

Quote from @David A.:
Quote from @Victor S.:
Looking good, David! 

 Thank you, these last few days have been a drag but I can see the finish line.

Hoping to get this rented for for March 1st and going to start looking into the cash out refi options this week. I'm very curious to see what the appraisal comes in at since this has been known to murky waters with the lack of comps. 

Remaining items:

  • Tile for front door porch
  • Water heater install
  • Minisplit HVAC system install
  • Electric (TBD) and gas meters (next week)
  • Punch list items

Post: CA ADU build progress pics, costs&anything else you want to know

Clarence Johnson
Pro Member
Posted
  • Real Estate Agent
  • Inglewood, CA
  • Posts 294
  • Votes 150
I submitted for ADU permits around the same time in Inglewood, Jan-March 2020 they said they were interpreting the state law.  Thanks for this post.

Quote from @David A.:
Originally posted by @Scott Winnie:

@David A. This breakdown is super helpful as I have many clients who are always curious "what an adu would cost in LA County".  I appreciate the attention to detail and you being fully transparent.  How long did it take you initially to get drawings, etc before you could break ground?

Scott Winnie

Glad its been helpful. ADUs get a lot of buzz, but the process always seemed like black box. I'm pushing through the fog myself and if it goes well hoping to keep repeating the process at my other properties. Here's was my timeline leading up to breaking ground:

  • September 2019 - purchased the property, pre-leased it before I could even close. The rent on the existing home covered the PITI making the unused part of the lot "free". I knew I wanted to add an ADU but the laws in 2019 were restrictive to say the least and would have required the property to be owner-occupied and wouldn't have let me build more than ~400 square feet. The upcoming 2020 ADU laws swung the other way and I read them word for word and got to re-learn how bills become laws.
  • Oct 2019 - Had an initial site visit and had a feasibility study done by some fly by night, over promise, under deliver "ADU consultants". Parted ways and went back to the drawing board. Probably my biggest reason why I want to share as much I can.
  • Nov 2019 - asked friends for recommendations of architects. Spoke to a few, began working with a designer / architect who did an addition for a friend. 
  • March 2020 - Decided on design /floor plan
  • --- Corona virus uncertainty pause ---
  • Jan 2021 - Picked things up again, engaged the engineer
  • Feb 2021 - Submitted the plans to the city planner for the preliminary review. No go, not even close. Turns out the city failed to mention a bunch of limitations during our initial discussions that came from the neighborhood specific plan from 29 years ago that directly conflicted with the state-wide ADU laws and current municipal code. They also weren't very forthcoming about the "mandatory approval" avenue that overrides the limitations in the specific plan that was also hidden deep in the municipal code. After some tense discussions with the planner and questioning if I had the stomach for this, we ended up having to drop 20% of the square footage to meet the "mandatory approval" requirements. This wasn't easy because we were already squeezing a lot in but still better than the first answer we got of no-way, no-how. This planner left the city shortly after, so I'm guessing she was already checked-out and jumping up and down to start anything in her last few days. Other than this one experience, everyone at the city was very helpful.
  • Mar 2021 - resubmitted for preliminary review and received a preliminary approval, submitted printed plans to get the official planning department approval
  • April 2021 - planning department approval and submitted printed plans to building & safety department for plan check. The city outsources plan check to a 3rd party and they have a min 10 day turn around. They only pick-up plans from the city twice a week so this can add some days if you miss a pick-up date.
  • May 2021 - plan check corrections dropped off at the city, I picked these up and scanned / took pictures of comments to send them out to the architect and engineer 
  • early June 2021 - resubmitted corrected plans for plan check. Engineers get busy. 
  • mid June 2021 - The plan checker had one remaining comment that was raised with less than an hour until he had to return the plan set to the city. The engineer saved the day by addressing the comment in record time by emailing a stamped / signed letter and saving us from having to re-print / re-submit and wait another 10 days. Plans are approved, remaining city fees are paid and permits are issued. We broke ground same week.