Rental Hacking! Pushing legal limits or smart investing?

5 Replies

@Christian Orozco - if someone is willing to pay for it, why not? My concern would be over doing it, and renting these extra spaces to folks outside of the long term tenants. I could see this causing problems. 

I see this property as a red flag for legalities.  Also unless you are paying cash your lender will likely not lend for the trailer or count the income for the unit you are living in so essentially your lender sees this as you buying a duplex.

No problem buying property with illegal units provided you only value property based on income from legal units. Find out from municipality what is legal and calculate NOI on those units only. You then use that NOI to determine what the property is worth. This way when your illegal units get shut down you can still cash flow on your investment.

There's a lot of properties like this in Los Angeles County. I've known many landlords renting out illegal garage conversions and get away with it. With the new laws passed in California in recent years regarding ADU/Granny Flats, it makes it a lot easier to do this legally.

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