All Forum Posts by: Alvin Uy

Yes, I know all about ADUs.  Who is exactly is “they”?  Not true about the city not caring about setbacks. It depends on each lot and if your converting existing structures that are grandfathered in.   And Be careful about setbacks— in some areas in L.A. the city planning requires 15ft from rear as well.  Be sure to check with zoning each time.   Also, ADUs sqft are limited — max 1200sqft or max 50%sqft of main house (whichever is less). 

Interested to know more where in L.A. you are investing ...where you are finding foreclosures and doubling your cashflow (even with ADUs)... because I cant make the numbers work here any more without significant investment or downpayment. Prices are way too rich now... even adding an ADU. Im flipping instead these days... Im even building from ground up now doing SFR to MF conversions on lots zoned for MFs, the rent ratio for MFs still dont work without a bigger down or larger value add expense... lots of red costly red tapes.

What % downpayment will it take to cashflow in Austin these day? 

Yes, ADU's are now allowed in Los Angeles on SFRs due to a big demand for affordable housing.... but can't be bigger than 50% sqft of main house. I have considered adding ADU's to my existing SFR properties but there are downsides I foresee:

-My current properties are in hot market areas with A-B class tenants paying high top $$ market rent. Having a property with and ADU will likely keep good quality tenants away because most of these tenants like their privacy would not want to live a multi-unit condition. My current SFR properties actually rent fast and rarely ever vacant because of this.

-Also, having SFR with an ADU as a rental, I believe falls under "multi-family usage" and will be subject to RENT CONTROL caps of 4% per year.. VS the current 10% allowable increase for "single-family" homes. Rent Control sucks for MF landlords here in Los Angeles!!

-Plus, I believe having ADU's without a separate meters (very costly to do) means I would also mean I would have to pay for water... maybe even power. I'd rather not do that. I actually need to look into this more because Im not sure if I can even separate meters to an ADU.

- In my opinion, ADU's are ideal for newbie investors that want to house-hack the main house and rent other ADU unit. So adding ADU's are good value add play when flipping a property.

 I like and appreciate your thinking though...    Thank you for that.

Investing in MFs and larger units is definitely something that interests me... I own and manage a 4plex in Los Angeles.   

Investing OOS was something I've recently come to consider. I am very very open to it after reading David Greene's book. OOS BRRRR strategy, however, worries me a bit because I know what goes into rehab projects... A LOT can go wrong. I know because I have extensive hands on experience as a rehabber for my own properties... and properties I flip. I have to admit... that component of it is still a bit apprehensive to me.

Coincidently, Detroit/MI has come up many times... but I have read several posts and discussions lately that Detroit is no longer a good area to invest in.... that that ship had sailed... Home price bumps are due to investor speculation from OOS investors.   I've seen this kinds of discussions during the last cycle before the last bubble crashed ...and typically these are areas that were talked about like this were the ones hardest hit in the event of a crash.   Of course, Im not saying everything I've read is right...but I do have to take these things with a grain of salt.  (I've heard the same about California being a terrible place to invest in but here I am with a $900k equity to play with.LOL).  

Not at all knocking on Detroit... that's not my intention.  I would like to learn more from someone like you with boots on the ground.   But I do have to be cautious about where to invest my money wisely this late in the cycle.  I like cashflow, but I prefer not to invest in purely cash flowing properties that do not have much potential for appreciation.  I don't want to invest in D class areas either.  That just does not fall in line with my long term strategy as a whole.

That said, I would love to hear more about your investment strategies in Detroit.  Perhaps, you can hook me up with your friend, Darren. 

Where?!

Actually, yes.... I've traded options snd futures.... And still trade options. But not sure its something i would think to use my HELOC for. Its a lot riskier in my opinion. Also, i want something more scalable to leverage my equity into. I still think RE is the way to go investment-wise

Im assuming the HELOCs being called/locked were because of the Savings & Loans crash, right?   

So... Just curious, how many times in the past have HELOCs ever been called or locked aside from the last crash? ... just wondering whats the likely hood of that every happening again. My HELOCs are based on 70% on my primary and 60% LTV with a max of $500K (whichever is lower) on investment property HELOC... I would think that's the lender's way of being conservative to put more than enough cushion there in the event of a severe market drop.

By JV... do you mean Joint Venture for flips or long term hold properties? Which states?

@Clay O. Well that sucks! Is your lender a local credit union?

I just went through a similar exercise. I was originally just going to have a JV agreement drafted with my partners LLCs. But creating a comprehensive JV agreement requires a lawyer... and its very very expensive!!!! So instead, we decided to just form a new LLC with both of us as partners.. with new LLCs operating agreement laying out the details of the partnership. A Much much easier solution... and much much cheaper too!