Investor · Oakland, CA · Member since 2017 · 9 posts · 2 votes
Hello fellow BP members,
I'll try to be short... My home is in Oakland, Ca. Hot market. Purchased with a 203kFHA in 2013 for 118k.. after renovation value 215k.. final price 209k. Current value 375-400k.
i built an in-law that brings in 1000/mo via AirBnb. my mortgage is 1283/mo :)
my budget is 125k. Id like to build a second story with a private entrance. In my market it can rent for 1400.
Should i pursue the project or save money and buy out of state with cash? pros/cons?
Ive added pics of the remodeled home and AirBnb unit.
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
9y
My first thought was that this is a very basic structure. In my market, it would be a tear down. Are you sure you can build a second story for only $125K? The whole structure would have to be beefed up to accept the added weight.
By the way, I would vote for a 3rd option: Take that money and invest in another property in your local area. Be patient and you will find one.
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
9y
My first thought was that this is a very basic structure. In my market, it would be a tear down. Are you sure you can build a second story for only $125K? The whole structure would have to be beefed up to accept the added weight.
By the way, I would vote for a 3rd option: Take that money and invest in another property in your local area. Be patient and you will find one.
The feasibility is to be determined. I have a meeting with a contractor this week. He's retired, but a family friend. Ideally he'll tell me if it's doable with my structure.
In my local market, a basic 800sqft 2b/1ba just sold for 400k. High cost to compete. I can buy with cash out of state. I cant even compete in my market.
With a full time job and an energetic 3 year old. I'm looking for the lease stressful route to an earlier retirement.
Los Angeles, CA · Member since 2017 · 19 posts · 10 votes
9y
Wow you did a great job with that property, why not just do it again? With a full time job and a kid it would probably be easier to get another project done locally than out of state IMO.
How was the process of getting a 203k FHA loan? I want to do something like this soon but I am concerned that sellers don't like this type of financing...
Investor · Boise, ID · Member since 2011 · 1k+ posts · 736 votes
9y
Welcome to the community, @Ansel Troy! We work with a lot of out-of-state (California) investors who have decided to invest out of state because of the current California market. Sounds like you have really done your research on different options!
I look forward to following your journey on future forums! You have some great things in place.
Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
9y
Make sure that zoning would allow for a separate unit before you build anything, but if that works out I'm always a fan of maximizing the properties you already own before going out and buying more. Also being in Oakland I think having three units on a single lot would increase your value a lot (assuming they are allowed and permitted of course).
Investor · Oakland, CA · Member since 2017 · 9 posts · 2 votes
9y
@dante the 203k was a major headache. We went into contract with a conventional loan.. shortly after, my assigned lender's mother passed away. She was working from the hospital.. the appraisal came in low, etc, etc. we switched to Wells Fargo for the 203k.. lots of red tape for Wells Fargo. It took forever to close.. I ended up moving into a pretty much brand new home. Remodeled from top to bottom.. plumbing, floors, roof, electrical, bath, kitchen, etc..... 98k in renovations that was all wrapped into the loan. If I were to do it again, I'd go with Prospect Mortgage. They have 203k specialist.
I don't think I can compete in our market. I could be wrong. Too many investors with deep pockets. I'd rather buy turnkey out of state for much less. If I can avoid a headache, I'm all for it.
Investor · Oakland, CA · Member since 2017 · 9 posts · 2 votes
9y
@Jonna Weber Thank you! my local market is extremely competitive. Lots of seasoned investors. I've met some people who have properties out of state. Its very tempting
Investor · Tromsø, Norway (Europe) · Member since 2015 · 431 posts · 194 votes
9y
@Ansel Troy Great job on the property! Have you looked into the possibility of refinancing and pulling some cash out? And how about a 1031? Is that possible for am exchange to a bigger property?
With the good work you've done I wouldn't do turnkey. You have an unfair advantage as Robert Kiyosaki would put it in your ability to rehab houses.
Investor · Oakland, CA · Member since 2017 · 9 posts · 2 votes
9y
@Aaron K. Thank you. I've contacted a few architects. The zoning for 2 units on my lot is conditionally permitted. Its up to the city. I think i have a good shot.
Investor · Oakland, CA · Member since 2017 · 9 posts · 2 votes
9y
@Ingrid J. Thank you. I sure wish i could rehab houses. I hired professionals to do the work. One of my goals is to learn carpentry, electrical, and plumbing.
i haven't considered the 1031. In a perfect world, the income from this property will pay for itself and another property. fingers crossed..