All Forum Posts by: Will Barnard

I too agree with Joel, do NOT call the city and have them come out!!! I too am a GC and developer and I also specialize in ADU's. I have done many deals in NELA for both clients and my own portfolio. Garages are not "livable space" either yet we convert them all the time and it does save some money since you have some walls, roof, etc.

Best bet for you is to have an experienced contractor familiar with ADU builds/conversions come out to look at your site. Within 15-30 mins of a site visit, I can assess and deliver pertinent info for potential options and then costs after that.

I will repeat, do not call the city, but do look up permit records from LADBS. I will also state that the advice given by another above about renting it out the way it is and "who cares" is not good advice. If you rent it out the way it is (non legal and non habitable) and someone gets injured or dies, your insurance carrier is likely not going to cover you since you were negligent by renting what you knew was not legal or safe. Is that risk worth it to you? It would not be to me!

Excellent assessment. I just wrote almost the same thing in another thread about investing in negative cash flow properties. Many said never do it and only invest in cash flow positive deals. I stated such opinions lacked all the research of data that one should look at to determine a deal or not a deal. Cash flow positive or negative is only 1 small aspect of the buy and hold deal. Well said above!

 Just to be clear, the bolded comment above is not fact just because you say so. If you ask every state's (all 50) department of real estate (DRE), I am sure many would tell you the opposite, that it IS brokering services. The only way I know to avoid brokering services is IF you take title then sell (double close) in which you did not market the property prior to obtaining title, or if you are a principle in the purchase transaction, i.e. the buyer is you and your money partner buyer. If you are not a principle in the deal and you are acting as a third party, then most likely you are performing brokering services per the DRE. This is not to say that thousands of wholesalers do how you describe and nothing happens to them, but that does not change the fact that many state's DRE will consider it a violation. Violations if caught can be fines, prison, and/or restitution. With that kind of risk, I personally would make sure i was doing it legally and not take the word of others on this site who do NOT represent your state's DRE.

 Plenty of people have provided their opinions on this so I will only add this: Why would you need help from agents to find real cash buyers? Finding cash buyers is about the easiest thing to do. Public records reports from your title company can show all cash closed transactions in entity names. Find those that repeat (more than 1 in a year of the same entity name) and there is your cash buyer. Then go to the state's website for business lookup, type in the name of the entity and find their contact info. Simple as that.

Welcome to BP Nation Shanna. If you intend to house hack in Dallas, I assume you will be moving there? As for your agent contact, don't get tied up with the first one you meet. Agents make money by representing buyers and sellers so they have self interests. Make sure you get the correct data, learn the lingo, learn the market trends and statistics, and then have conversations with multiple agents. This subtle interview (for lack of a better term) of each will give you different opinions and perspectives from different agents depending on their experience levels and current knowledge. If you can make an off market purchase, you will likely get a better deal and thus, have more equity from the start - make your money when you buy.

Building your team either here in LA or in Dallas will also be essential. Network at RE meetups and get to know others who do what you want to do, get tips and tricks from them and learn about the mistakes they have made. Some of the very best education you can get is learning from others mistakes so you can avoid them, increasing your odds of success!

To all the responders on this thread who state it is never a good idea to invest in a negative cash flow property. SO if it cash flows, it must be a good deal, right? Forget appreciation, forget amortization, forget depreciation.

There seems to be a strong opinion to the statement of NO to negative cash flow, yet all of the opinions fail to mention some very important factors. In other words, if it cash flows, it is a green light to purchase. - WRONG

For any buy and hold (or even flips for that matter), there exists many data factors that a savvy investor will look at to help make the decision. In fact, some will take that negative or break even cash flow deal as opposed to the cash flow deal if the other important factors exist.

If I am buying to hold, I expect to have a 10 year hold window (give or take a year or 2 and possible even keep it for 20+) and my deciding factors to purchase it will be based on the following: Population growth statistics for that specific area, crime rates (are they up or down), income growth, jobs growth, and home price appreciation statistics. If I find a property that does not cash flow at purchase but is in an area with top statistics in these 5 factors, I must consider it very closely and perhaps it is a much better deal than the cash flow positive in a city where those statistics are poor.

No, private lenders are typically not licensed loan brokers and as such, they must stay within the state's usury limits for loans. Every state has its own usury limits.

I have a large distain for the gurus and the "programs" they sell, many of them regurgitated and outdated info peddled for money. They sell these programs because they make more money without risk then flipping themselves. So why would you want to learn from someone who markets and peddles their programs rather than someone who actually does it?

 This is great advice, however, a cost seg will not be efficient on a single family home, the cost seg will likely cost you more than any benefit. Cost segregations are best for larger multi family and commercial properties.

Sounds like you developed a ton of equity in this deal so your best bet is a cash out refi. But BEFORE you make that decision, you need to get with your experienced RE CPA to do a side by side and apples to apples comparison of your cash out refi, what investment you get using that cash (and the returns from it) vs selling this as your primary residence (since you lived there for 2 of the last 5 years) and have a $250k exemption to capital gains tax (as a single person) and $500k as a married couple. SO what could you then buy with all that cash? Or, if you sold and 1031 into another larger project, perhaps a larger multi family where you get more economies of scale and good cash flow. It is always best to analyze these comparisons side by side with your CPA so that you can make an informed and calculated decision that is best for YOU.

I think ADU's are a great option for the buy and hold investor to maximize cash flow since you already own the dirt so adding units only has the construction cost aspect (and some soft costs associated with that). The trick is financing the construction of it and without cash, it is not always easy to do unless you have a ton of equity in the deal.

What area of Los Angeles is this project in? I am a developer, contractor, designer, etc. so I have a lot of experience in this area.