The agencies are being conservative and trying to avoid getting burned, but I would not be shocked to see sponsors coming out with low 4 or high 3 cap rates and 75+% LTV in the next few months to try and squeeze a deal in.

So when i first started wholesaling last July i was using the 70% rule minus repairs minus my wholesale fee to calculate all my deals, I quickly realized i was getting burned on my deals, Deals i would pass up on other people would pick up and make 10k+ wholesale fees on and just left me wondering what am i doing wrong.?

For reference, figure on $275-325/sqft for all-in ADU project costs…so an 500 sqft 1BR standalone ADU would typically cost around $160K.Pre-construction costs: $10K for design, construction drawings, title 24 energy report & electrical layout, permit processing. $5K or so for permits, assume 10X the sqft of ADU (500 sqft = $5K fees).Construction costs: $250/sqft + $10K sitework (e.g. preparing the building pad, connecting utilities, plus a small amount of landscape and concrete work)

I have one in Boulder Creek, Ca that is right on the front line of the fire in Santa Cruz County - we are still unsure if it has burned to the ground or not.

You can’t develop a rule of thumb unless you want to get burned.

If you aren't expecting to spend the time/energy and knowledge you expect out of a backsplash person.

You sound overwhelmingly not ready to do this in my opinion and are ripe to get burned.

As I said before, a far better use of time/ energy than working on a PM structure that math has doomed to failure from go, especially as it is an existing un-solved problem in the market.

The base rate you pay for premiums is paying towards a worst case scenario - total burn, etc.

It’ll help keep your kitchen (and connecting rooms) cooler and save energy as well.