Construction Loan for an ADU

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  • Anudeep Pradhan
    OP
    Member since 2021 · 18 posts · 4 votes
    3y

    Quick note to add to my post: I am about 2 weeks away from securing the requisite permits and am working with a licensed contractor for the project.

    Thanks again.

    Andy

    0Reply
  • Nicholas Ruscio
    Lender · Member since 2023 · 112 posts · 35 votes
    3y

    Hey Andy, 

    We work with a diverse group of governmental, commercial, and primary programs. Please feel free to PM me with more information and we can check out your options. 

    0Reply
  • Anudeep Pradhan
    OP
    Member since 2021 · 18 posts · 4 votes
    3y
    Quote from @Nicholas Ruscio:

    Hey Andy, 

    We work with a diverse group of governmental, commercial, and primary programs. Please feel free to PM me with more information and we can check out your options. 


     Sent you a connection request Nicholas.

    Thanks.

    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    3y
    Quote from @Anudeep Pradhan:

    Hello,

    I am in the process of securing a construction loan for a 550 square feet ADU which will be built on my primary residence.
    I was hoping that you could help provide some leads on some good lenders that I could reach out to.

    Thank you in advance for your help!

    Andy


     Why not use a line of credit on your primary instead? The rate might be more favorable than unsecured debt and you won't have to do draws which is typical on a construction loan. 

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    0Reply
  • Anudeep Pradhan
    OP
    Member since 2021 · 18 posts · 4 votes
    3y

    Hey Erik,

    I appreciate your response. My only concern with a line of credit is if the lender were to withdraw it in the future would I not be on the hook to refinance the loan from another lender or would it impact my primary residence mortgage loan that I have locked in at a really low interest rate?

    Thanks,

    Andy

    0Reply
  • Dennis Muno
    Lender · Denton, TX · Member since 2023 · 349 posts · 80 votes
    3y
    Quote from @Anudeep Pradhan:

    Hello,

    I am in the process of securing a construction loan for a 550 square feet ADU which will be built on my primary residence.
    I was hoping that you could help provide some leads on some good lenders that I could reach out to.

    Thank you in advance for your help!

    Andy


     Hello Anudeep,

    So for the ADU, do you plan on renting it out after it is completed? Will there be tenants living in it after you are done?

    Do you have investment experience(owned any rental properties, bought, sold, bought and flipped, fixed and held as rental) in the last 3 years with your name on title? Most lenders for these loans will want to see some sort of experience. Construction lenders will usually also ask you for an itemized budget. 

    Given that it will be built on your primary residence will raise some eye brows if you are looking for investor financing. 

    The big question is will the ADU be rented out(it sounds like it)

    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    3y
    Quote from @Anudeep Pradhan:

    Hey Erik,

    I appreciate your response. My only concern with a line of credit is if the lender were to withdraw it in the future would I not be on the hook to refinance the loan from another lender or would it impact my primary residence mortgage loan that I have locked in at a really low interest rate?

    Thanks,

    Andy


    On a line of credit you can draw as much as you need and you only pay interest on the balance you draw from the line. It does not affect your first mortgage rate because it is not a refinance. You can pay it down monthly, from the rents you receive from the ADU.

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    0Reply
  • Anudeep Pradhan
    OP
    Member since 2021 · 18 posts · 4 votes
    3y

    Hi Dennis,

    I do plan on making it a long term rental and yes, I have been a landlord since 2012.

    Thanks,

    Andy

    0Reply
  • Anudeep Pradhan
    OP
    Member since 2021 · 18 posts · 4 votes
    3y

    I appreciate the information provided. Thank you so much.

    0Reply
  • Joseph Schmitt
    Los Angeles, CA · Member since 2018 · 13 posts · 0 votes
    3y

    I used renofi.com/to build my ADU last year and had an awesome experience.

    0Reply
  • Anudeep Pradhan
    OP
    Member since 2021 · 18 posts · 4 votes
    3y

    Hey Joseph,

    Yes, I am working with them as we speak. I heard from a bunch of other folks as well about them and you’re another one who’s recommended them. So thank you for that.

    Best.

    1Reply
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