Architect needed in Los Angeles area and question

6 Replies | Los Angeles County, California

I have never posted before so please let me know if I'm doing it wrong. I am a (very) rookie investor planning a house hack. I will be adding an ADU (additional dwelling unit) to my property for rental income. I have a bid from one architect that seems very high. Can anyone provide an architect referral in the Los Angeles area (Altadena, CA specifically)? Is an investor friendly architect even a thing? If so, that would be a huge plus.

Also, this might be a dumb question but is it ever possible to get a loan on the ARV? The home is in a very expensive neighborhood so the additional square footage will make the property worth so much more after than it is currently worth. I was thinking we could do it like a BRRR but I'm worried about refinancing after the build because the interest rates might increase dramatically by the time its finished.

Any referrals or advice you can provide would be so appreciated.

Thanks! Heather

How big of an ADU and what was your arch bid? Cant answer if it is high without knowing that info.

You can certainly refi after the ADU is done and hope that they give you enough value needed to get your funds back but you couldn't get a loan based on the ARV with the ADU. Keep in mind that the appraisal will not give full value to your ADU compared to the main house.

@Heather Rummel Hi Heather is this a Tiny House or a garage conversion. There are websites that sell plans for tiny houses that you can have professionally printed. There are also ADU all-in-one shops that do the plans, build, etc.

I hope this helps.

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>is it ever possible to get a loan on the ARV? The home is in a very expensive neighborhood so the additional square footage will make the property worth so much more after than it is currently worth. I was thinking we could do it like a BRRR but I'm worried about refinancing after the build because the interest rates might increase dramatically by the time its finished.

The value of properties with less than 5 units is based on comps not on income. In general, hands off ADUs add less value than they cost to add. They typically start with a negative position. They are the opposite of a value add. Therefore a refinance can only extract the ADU costs if the primary has appreciated enough to make this possible. The appreciation of the past year means that many properties would have enough equity for this to be feasible. However with more traditional appreciation levels, it could take years of appreciation to recover the negative position.

Make sure before you proceed you understand how an appraiser will value the ADU.

Good luck

Depending on the loan limits you can do the FHA 203(k) loan. That way you can get the funding for the ADU construction. That's what I did (for a purchase, not refinance). The tricky part is getting dollar for dollar value, which will be unlikely unless the property itself has equity.

Is your ADU a detached new build or a conversion? The price range I saw in LA was between 6-25k so plan to get multiple proposals. Sorry I don't have any recommendations I'd feel comfortable to share.

As other have mentioned, HELOC or cash-out refinance against the existing built up equity is your best bet. If you have a large brokerage account you could do a margin loan or pledged asset line. Another option is an unsecured personal loan, First Republic has the highest loan amounts and lowest rates I've seen but they have clauses that the funds can't be used for investment purposes or major construction projects so you should read the terms carefully and discuss your intentions with the banker to make sure its permissible.