What would you do if you were me?

Question

I just inherited a property in OC: a 60 year old house 900 SF sitting on a 7,000 SF lot. I am thinking just rent it out for about 3k monthly. I am also thinking about converted to a duplex to increase income. Would you do it if you have the fund to convert?

Peter Mckernan · Answer

Build an ADU, $250.00-$275.00 per sf build roughly ground up which you have plenty of room. You can build up to 1200 sf grown-up detached and 50% of the existing attached. I would do ground up and you'll be able to exceed the 1% rule. Same size as existing get $6K total for both units while you spent $225,000 roughly building it.

Chris Willard · Answer

Hey @Peter Hugh consider looking into a short term rental in Big Bear, CA. I see you are in Orange County. I own and manage up there and it has been a great investment.

Peter Hugh · Answer

Okay, I will sleep on it.

Peter Hugh · Answer

Thanks for the sound advise.

Dylan Speer · Answer

Hey Peter,

I work at a real estate investment advisory firm in Denver. Many of our clients have inherited property and are looking for advice on how to get the highest return. Honestly, we see the highest both cash flow and appreciation returns in alternative investments. For example, we'd have a client that inherited a home sell the home and invest in a student housing fund and become a partial owner in that. The sponsor of the fund pays out a 10% average annual return, let's say, and then returns capital after a couple years and realizes a 15-25% IRR upon sale.

Feel free to reach out if you want to hear more.

Bjorn Ahlblad · Answer

@Peter Hugh congrats on your first post in what, 14 yrs? And congrats on your good fortune too. I would simply rent is out using a well recommended PM, if I were in your shoes. You need to be a really experienced LL to manage tenants in Ca. You have a world of options; all the best!

Andrew Bang · Answer

If you haven't before, probably not.  How much additional rental income would it bring compared to the cost of converting it a duplex.  Are you good with those returns and managing tenants?

What would you do if you were me?

Most Popular Reply