All Forum Posts by: Christine Smith

Hello, 

So we're looking at our second investment "door." We're considering both an AUD (in CA on our primary residence) or an out of the area condo or duplex/triplex. We'd be looking to use a HELOC either for the ADU or for the 20% down on an out of area rental.

Assuming 500 sqft 1BR standalone ADU would typically cost around $160K. For the areas we're researching, $200-400 cash flow is the target.

What calculations would we need to run to see what would be the best route for us?

Thank you!

Peace,

C

Following

Hi @Dave Toelkes, thanks for explaining all of that. Really helpful.

One more question, we’re looking at a state next door for the purchase. I’ve heard we need a lender in the state of purchase. Is that right?

In CA the “back house” is like a mother in law unit, granny flat, or a small detached unit on the same lit as the primary residence. I’ve also heard it called a two on a lot, but “back house” indicates the units are not equal in size. For example our front house is 3/1.5 and the back is a 1/1, no conjoining walls. 

Hello, we're looking at purchasing our next property. Our first property is our primary residence, with a back house. To make the next purchase, we're looking to use a HELOC on our first property for the down payment.

What I don't understand yet is how we finance the balance. With 20% down, what will brokers be looking for to qualify us for a loan on the balance? Will it be the same as it was from our first property, which is FHA? Given the second property is clearly a rental, will we be able to use the rental income at 75% to help qualify?

Thank you for your help!

Thank you @Joe Homs. I'll pass the info on. Very helpful.

Hi @Joe Homs, thanks for your reply.

The issue is that their multi-building complex has several buildings that have been "red flagged" by the City, and the rest are in need of significant structural repairs. And the HOA has extremely insufficient funds to complete repairs after multiple additional special assessments (over $20k per unit in the past year and a half), due to: 1) only about 50% of owners are current on their monthly HOA dues (about half the owners have some form of lien on their property), and 2) possible fraud either within the HOA board or the property management company.

The was a recent independent assessment of the finances, and the recommendation was that HOA fees increase by $200/month. They were already at over $500/month/unit. Area HOAs are regularly in the $200-300 range, unless it's a luxury community (this is not).

Does this help?

I have a family member going through a rough batch with their HOA on their owner occupied condo. Looking for a real estate lawyer who can help them sort through and consider their options.

Thank you.

It sounds like they're operating within most city ordinance quiet hours (usually 10pm). So it becomes a neighbor-to-neighbor issue, rather than a landlord to tenant issue.

@Ted Klein, maybe my approach is different, or there's a difference due to location (which is totally okay!). Here's how it looks when I start getting interest from our rental if it's available:

- I reply to lead emails, asking any follow up questions I need or letting them know if it's not a good fit due to pet restrictions, # of occupants, etc.

- I invite people who've given me a lot of info on the outset (via Zillow, etc.) and who look like strong applications an invitation to book a viewing, or more likely attend a pre-scheduled open house.

- At the open house, if it still seems to be a good fit (gut checks, no suddenly revealed secret cats, etc.) I invite them to apply to our online application, which is where the credit and background checks are located. 

- I tell them we are looking at qualified applications who apply by X-date, and will notify the applicant we want to move forward with at that time. (We tell them we look for 2.5x income and 550 credit+, and any red flags of issues we specify in our lease that they are not able to sign the lease honestly, etc.).

- If I saw questionable activity from them, I would consider them "unqualified" and would not feel the need to follow up because I've already communicated my process to them. If they get persistent or demanding, that's a red flag to me and I would not follow up.

I hope this helps! If I can provide any further clarity let me know. 

@Ted Klein, totally! Can you say more what you mean about the applicant being “insistent”?