All Forum Posts by: Connor Nellans

@Brandon Petersen the rules could be different in CO, but I know here in California that they would each be considered their own unit and you would need commercial financing. Sounds like a fun project, best of luck!

@Justin Beckman Great first step! HELOCs are a powerful tool that can be a catalyst in jump starting your RE investing business. I am San Diego based as well and recently used a HELOC on my home to finance an ADU addition. HELOCs are quite versatile in how and what you can use them on. I would ask first, what is your RE investing goal over the next 12 months? Are you wanting to invest locally? Single-family, multi-family, commercial? Is your current property zoned for a potential ADU addition? I would focus on clarifying what your investing goal is and then devise a strategy to use the HELOC in the most efficient way possible. I will shoot you a private message and we can set up a time to grab coffee or a beer!

@Lamar Washington I think mentors are crucial and can help you avoid mistakes and expedite your growth. That being said, I believe mentors can come in a lot of different forms. By listening to the Biggerpockets podcast and reading RE books, you have mentors. Just because we cannot interact with these people directly doesn't mean they aren't mentors in a way. They are helping you learn and giving advice. I didn't have anyone mentoring me in the traditional sense when I first started out, I just listened to as many podcasts and read as many books as I possibly could. Then, once I got a deal or two under your belt, I now had some rapport when networking with potential traditional mentors in my areas. I have found that people are more eager to help once you have some experience and show that you have the drive to make a deal happen. Hope that helps! 

@Luke Millet I would check out comps from the area, try to find out the last time the property was rehabbed, and have a strong grasp on the potential rents you could demand.

Comps will give you a price range in your area for new and outdated properties. Finding out the condition of the property will give you an understanding of how much money you will need to put into the property to fix it up. And understanding what you could demand in rents once you have it rehabbed will allow you to run an analysis to see what you would pay for it. 

It sounds like the door into a potential off market deal with the owner has a small opening, foster that relationship with the owner so you can keep opening that door. Off market multi-family deals can be great opportunities especially if he has owned the property for many years. Good luck!

@Magdaleno Garcia I love your hustle! I have built an ADU on my home here in San Diego also. I think they are an awesome opportunity for investors in our area.

Some points that may help you answer your question: If you decide to build another ADU on your current property for $100k and get a rent of $2000 to $3000, you are crushing your cash-on-cash return! There is no where else in SD (or anywhere for that matter) that you could buy a new property for $100k and rent it out for $2k to $3k.

If I were you, I would build the additional ADU for $100k, effectively turning your property into a triplex. Since your payment is so low on your home, I am guessing you have owned it for a while now and bought it years ago (this is great for your equity position!). Once you build the next ADU, you could get your property appraised and I am guessing you would see MASSIVE equity gains. You could then either cash out refi these gains OR setup a HELOC on that massive equity position to finance your next deal.

You are sitting on an awesome opportunity! If you have any questions I am happy to help as much as I can. In addition to building the ADU on my home I also own a 4plex in SD and have a portfolio of properties back in Minnesota where I am from.

@Kevin S Porter Sr good work on getting to $10k, that is an accomplishment in itself! As others have said above, 3.5% FHA is your best bet. That being said, I think you need to focus on finding a good, under market deal.

The best way for new investors to scale their RE business is to use the power of value add to refinance cash out of their investments to continue to scale (BRRRR). Say you buy a $280,000 property with your $10k, you are left with no working capital to use to fix up the property and increase the value. If you can buy a property for $280,000 that is actually worth $310,000 you can then have some equity in the home right off the bat that you can tap into via a HELOC to use as capital to rehab the property. After you rehab, say the property is now worth $370,000, you have now built $50k more equity you can use for your next deal.

This is a 10,000 foot view of the strategy and there are lots of moving parts that go along with this, but the point I am trying to make is that you need to become great at analyzing deals and don't be afraid to jump on a good deal if you find one! This is easier said than done, as everyone is looking for good deals, but it is definitely not impossible. Best of luck!

@David Martin Jr I can't speak to LA, but in San Diego I have found a sweet spot in buying distressed 2-4 unit properties where the rents are below market, repairing these properties, finding tenants, and then refinancing. Implementing the BRRRR strategy. This can be an expensive undertaking, so having access to capital to finance the repairs is a must, but if you can buy and rehab for the right price, you can absolutely make it work.

I will say investing in CA does have its challenges including but not limited to:

1. Very tenant friendly state. Be prepared for the benefit of the doubt to always be given to the tenant and to have to go the extra mile as a landlord/owner to get things in your favor. I often feel like the state views me as the 'bad guy' as a property owner.

2. High cost of entry. Properties are expensive so you need to really sharpen your analysis skills to make sure you are buying good deals. (This has turned into a blessing though because now my partner and I are confident in our analysis skills and have found great deals in out of state markets we invest in.)

Hope this helps! Never hesitate to reach out if you think I can be of assistance. 

Hey Nicole! I am an investor in SD myself. I own a duplex in Bay Park and a 4plex in PB. If you ever want to chat real estate investing in SD I am happy to help! I have a small group of other local investors that I meet/chat with regularly, I am always game for talking real estate.