All Forum Posts by: David Maldonado

Has anyone heard of CA SB 1210 or SB1212? It has been recently introduced and is supposed to put a cap on the cost to install utility hook ups for new construction and ban hedge funds and corporate entities from buying single family homes in California):

SB 1210

"This bill would, for new housing construction, prohibit a connection, capacity, or other point of connection charge from a public utility, as defined, or a special district, as defined, for electrical, gas, sewer, or water service from exceeding 1% of the reported building permit value of that housing unit. The bill would require a public utility or special district to issue an above-described charge over a period of at least 10 years commencing on the date when the housing unit is first occupied, as specified. The bill would require a public utility to publicly report on its internet website the amount of any charge issued each year pursuant the above-described provision by the housing unit’s address. The bill would also require a public utility to prioritize the processing, approval, scheduling, and completion of electrical, gas, sewer, and water service connections to new housing construction over the processing, approval, scheduling, and completion of service connections to all other structures. To the extent that this bill imposes new requirements on certain special districts, the bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above."

SB1212

This bill, on and after January 1, 2025, would prohibit an investment entity, as defined, from purchasing, acquiring, or leasing an interest, as defined, in a single-family dwelling or other dwelling that consists of one or 2 residential units within this state. The bill would provide that a purchase, acquisition, or lease of an interest in housing in violation of this prohibition is void. The bill would define “investment entity” as a real estate investment trust or an entity that manages funds pooled from investors and owes a fiduciary duty to those investors. The bill would exempt nonprofit organizations and other entities primarily engaged in the construction or rehabilitation of housing from the definition of “investment entity.”

I'm curious on what everyone's thoughts are on this. There is also a 3rd bill, SB 1211, that is supposed to allow more ADU builds on multifamily homes.

Quote from @Aaron Arnold:

Specialized Lenders: Look for lenders that specialize in investment properties or non-traditional property types. These lenders often have more experience and flexibility with properties that include ADUs and JADUs.

Community Banks and Credit Unions: Local community banks and credit unions may be more willing to work with you, especially if they have a better understanding of the local real estate market and the value ADUs and JADUs bring to a property.

Mortgage Brokers: A mortgage broker may have access to a wider range of lending options and could help you find a lender willing to consider your property. Brokers can be particularly useful in navigating the complexities of loan products that might fit your situation.

Portfolio Lenders: These lenders use their own funds to finance loans and may have more flexible lending criteria than traditional banks. They might be more open to unique property types and willing to take on loans that don't conform to the standard criteria of larger financial institutions.

 Thank you for that Aaron, I haven't looked into specialized or portfolio lenders.

Quote from @Robert Ellis:

Quote from @David Maldonado:

Quote from @Jaron Walling:

@David Maldonado How much equity are you going to leave in this property? I'd be asking myself that question. I can't see the numbers penciling otherwise but I'd love see how it could. 

New construction and BRRRR don't work like it does when you buy distressed properties below market and rehab them back to market value. There's no value add component. New construction doesn't benefit from the spread of value add vs ARV.

Hi Jaron,

I won't know until I find out what the total costs are from the city to build (permits, school fees, impact fees, required improvements etc.) and the cost to run utilities. This is the part where I need guidance in from experienced build to rent investors.

I've built one of my 745 sq detached adus for an all in price of about 70k (plans, permits, fees, construction costs etc.) That is currently renting for $2300 per month. This was during covid when lumber prices skyrocketed.

I think new construction deals are hard to BRRRR, if its hands off construction (unless you get the land at a very good price). I will be performing most of the work on the new builds, so I'd save quite a bit on labor. 

 exactly correct. land cost drives everything and location. before we vet any deal in columbus or any market we look at land cost, tap fees, plans, rezoning fees, and then exit price as well as what the property will sell or rent for. that's why we build as small as possible units for single family and houses under 25% of the average size home in our market 

Interesting. How did you know where to look to estimate all the soft costs involved with a new construction project? 

Quote from @Jaron Walling:

@David Maldonado "I've built one of my 745 sq detached adus for an all in price of about 70k (plans, permits, fees, construction costs etc.) That is currently renting for $2300 per month." - OMG that's incredible. Wish you could go back in time and build 5 more?... ha

Thank you! I was able to build 4 of them and I'm saving money to build a 3rd detached ADU on one of my properties that currently has an attached ADU and a JADU. But unfortunately I got priced out of my market. Way too much demand and I don't have the capital to compete with other buyers in my area.

Quote from @Jaron Walling:

@David Maldonado How much equity are you going to leave in this property? I'd be asking myself that question. I can't see the numbers penciling otherwise but I'd love see how it could. 

New construction and BRRRR don't work like it does when you buy distressed properties below market and rehab them back to market value. There's no value add component. New construction doesn't benefit from the spread of value add vs ARV.

Hi Jaron,

I won't know until I find out what the total costs are from the city to build (permits, school fees, impact fees, required improvements etc.) and the cost to run utilities. This is the part where I need guidance in from experienced build to rent investors.

I've built one of my 745 sq detached adus for an all in price of about 70k (plans, permits, fees, construction costs etc.) That is currently renting for $2300 per month. This was during covid when lumber prices skyrocketed.

I think new construction deals are hard to BRRRR, if its hands off construction (unless you get the land at a very good price). I will be performing most of the work on the new builds, so I'd save quite a bit on labor. 

Hey y'all,

Anyone utilizing the build to rent strategy in or around the fresno area? I am interested in pursuing this strategy, but I don't have any experience with new construction, besides ADUs.

My plan would be to build traditional 3 bed 2 bath single family homes with detached ADUs. I know the permitting and building process is way easier with ADUs, but I would assume that it's much more difficult with single familys.

I will be acting as my own general contractor (currently waiting to be issued my remodeling contractors license). I have experience building ADUs on my properties, but haven't tackled a new construction project for a single family with unimproved land.

I'd be using the BRRRR strategy, cash out, and do it over and over again.

I would love to connect with anyone doing this!

Hey y'all,

i recently passed the law and business exam for the b-2 license. I'm currently studying for the trade exam. 

I qualified through owner builder experience, military credit, and my college degree. I wanted to keep buying properties and build ADUs in my area, but I got priced out of the market and most of my cash is tied on my properties. so I decided that i wanted become licensed and do what I enjoy for clients. I love everything about construction, this has probably been the first career/business that I actually obssess about mastering it. 

I would love to connect with b-2 contractors and even general contractors, to hear about your experience!

I also plan on getting my gc license to build new construction.

Hey everyone,

So I have been looking for a lender that can open a HELOC on a my primary residence single family with both an ADU and a JADU. Unfortunately, all the lenders I have called so far do not lend on multi-unit properties. Has anyone else, in a similar situation, had any luck getting a HELOC or Equity loan on a property with an ADU and JADU?

Has anyone heard about getting a land trust to bypass the JADU owner occupancy requirement? I've been following 'howtoadu" and that was mentioned by a construction company that builds ADUs. 

Quote from @Jeff T.:

 Will do!