All Forum Posts by: Alec B Calzada

So I know a guy who is interested in working a deal out with me on this property, as long as we can both profit from it. Here are the details:

-He owns the lot free and clear (existing single-family house on it with renters)

-He hired me to design a 4-unit Apartment Building for him on this lot (new construction)

-We got 90% of the way through the Planning approval process, only a few hoops to jump through there to finalize the approval

-The Design and Concept for it is Approved and the owners wants to build it, but his financing feel though when his investment partner had to step away

-I have no money myself to invest in this, but I do have the skills/ability to finalize the plans needed to pull the building permit.

-Estimated cost of construction is $1.3M with rent estimate of roughly $2,200/unit per month based on comps in the area. (4 units)

He’s willing to hear what I could offer him on this project (either to partner up or strategize a way to finish it). I just have no idea where to even begin!

Is this an opportunity at all? Is there a creative way we could secure financing? What could be in it for him AND me? Thanks in advance for the thoughts and advice on this situation.

@Joe Prillaman

Sorry for the month late reply on this! Unfortunately, the project wasn't able to get off the ground. We got all the way to Planning Approval and were preparing to enter Construction Design & Engineering when the client's partner had to drop out. Our client wasn't able to secure a loan on his own that would have covered all of the costs. He's now attempting to sell the property with the Plans and Designs and Approval Letter from the Planning Department as assets to increase the sale value of the property.

Following

@Chris Penny Hey no worries. My goal was to shed light on the many options or approaches that you can take to get to the same goal. I'm glad you came here to BP to get your thoughts out and make sure that you don't get in over your head. 

Just because you mentioned it, maybe you couldtalk with your in-law to see if he'd be interested in partnering with you financially on the build of the ADU? If he has a home currently or if he has a retirement fund set aside, perhaps it would be to his benefit to invest with you in the construction of the ADU so that he can be closer to you and your wife as your toddler grows? If he's looking to retire in a few years or maybe more, why not set this up now? The money would simply be going into property that's in the family and will increase it's equity. You could let him live in the ADU for a period of months rent-free as a way to get his money back. You're mortgage wouldn't go up, but the equity would and he'd be set up in his retirement living situation well before it becomes a necessity. Not to mention the cost would be significantly less than retiring in a village, or buying a new, smaller home elsewhere.... Sorry, it's just that I know a lot of retirees that are very happy now that they're living in an ADU with their families. They see it as a real win-win.

Good luck with whatever you do Chris!

Do you remember the "Zombie Flips" BP Podcast episode? I'd take a look at it and take a note from his playbook by having a Catholic Priest (exorcist?) come by the place and bless it. Bad things have a way of "sticking around" sometimes. Just a thought.

Chris,

We're an architecture firm that does work all over California and we have been doing a LOT of ADUs recently because of the recent Senate Bill passing that relaxes a lot of the typical restrictions. I would consider keeping your ear to the ground. While construction costs in your area are likely to be where @Ori Skloot states when it comes to conventional construction, there are Creative Construction methods that you could use that take a lot of the bite off the over-all cost. Structural Insulated Panel System (SIP) framed houses can sometimes have large cost savings or Machine Framed walls and rooves can be constructed in-factory and then assembled on-site (and they aren't considered "pre-fabricated").

What I would do is:

1) Break out the phases of the construction 

  Architectural Plans/Construction Documents/Building Permit

  Grading and Drainage

  Foundation

  Framing

  Windows and Doors

  Mechanical (HVAC)

  Electrical 

  Plumbing

  Drywall/Finishes

  Fixtures

  Paint

2) Identify what you can do yourself (best way to save money), remove it from the scope of work

3) Research or solicit bids from several contractors asking each for a price for all of the above (they may need a set of plans, so that'd be the best place to start)

4) Research unique or creative methods of getting each phase of the project done

    i.e. - Maybe you can get pre-made architectural plans that are easy to modify?

          - Maybe you can get your gardener to do the grading and foundation work? Lots of gardeners I know get small landscape jobs like that and have the people/equipment to do that level of work

           - Maybe you can research alternate framing methods (SIP) or Machine Framed (ABI Tech)

           - Maybe you can put in a store bought HVAC system? Do you have extreme climate to deal with? if not, maybe a wall mounted split AC system is all you need for the whole unit if it's small enough. Utilizing Radiant Barrier and high values of insulation (R-Value) will reduce the heating and cooling needs of the building over-all and aren't very expensive. 

           - Maybe you can purchase windows and doors at auction or an outlet center? Local swap meet or flea market? Avoiding the salesman can save you a lot of money, but you need to know what you're looking for. 

5) Award different contractors smaller sections of the total project and be sure to keep the cost within your budget. 

Do all of that, you still might go over the $80K mark, but if you don't have any other real estate deals to look at, you might as well do all of the research and planning that you can and see if you can squeeze it out. Knowledge is power, knowledge is savings. Do your research and let me know if there's anything I can do to help. Good luck out there!

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Aaron, I work with a lot of folks investing in the Ontario area. Currently pushing a 4-unit (new construction) building through at the city of Ontario for one of them. Prices are rising steadily. Rental pricing too ($1,800 for a 3-2 unit or home). Still lots of low-end housing available though. Historic homes/properties in the historic area can be a head-ache to purchase or develop, but the equity yield after an addition or major remodel is significant. I drive past distressed homes there every week. I'd look at the areas around Euclid and Holt, and then East from there towards the freeway and airport. I use Redfin to find houses for sale and then to find comps.

We have a decent sized business going and have use: Evolve (multiple numbers and lines for different folks, it's affordable too) HubSpot CRM (for managing projects, leads, contact info, tasks, and track emails "seeing if the person opened it or not") Both come highly recommended.

Hub Spot CRM: It's free It integrates with Gmail for email tracking There are no limits to size or members It's got great tutorials Super user friendly Also has project management and task management tools built in (also free) At least that's how it is for me They also have call tracking and recording if you want to pay for that The email tracking is a huge benefit. Highly recommend checking it out.