All Forum Posts by: David Maldonado

Hey everyone, i want to use the va new construction loan to build a quadplex with 4 bed 2 bath 1400 sq ft and a 34x24 garages per unit. I'd basically want to house hack a new build. 

i know this would be really tough to sell, but would i  increase my chances if i came up with a solid plan? I'd include

land info

if the city will allow it

all preliminary costs before the okay to actually start building

cost of construction 

length of construction 

contractor info

comps in the area by sales and income approach due to it being multifamily.

market rents comps

and basically a price for the entire project from start to finish.

I'm coming up with a plan so i can start contacting lenders....especially if my offer doesn't get accepted haha

https://www.cityofsantamaria.o...Hey everyone,

I am thinking about using a new construction/renovation loan to convert a single family house into a duplex (new construction) and build 2 detached ADUs. I want to figure out every single cost associated with getting the building permit. I want to know how to calculate the cost of a building permit, how much in development/impact fees, school taxes, encroachment permits (and any other required permits) and any other required fees. Basically, I want to know how much is it going to cost me before I can even start building anything (soft costs) so I can see if the numbers work.

Project Information

Single family house with at least .50 acre lot

Convert sfh into 6 bed 4 bath (2000 sq ft each unit)

Total: 12 beds 8 baths (4000 sq ft)

I already have the permit and fees costs for the ADUs.

I asked the city on how I can get all the possible costs for a new construction project and she sent me files with a breakdown of costs but I have no clue how to use it! Hoping that someone familiar with the process can be of help!

Thanks!

https://www.cityofsantamaria.o...

https://library.qcode.us/lib/s...

Quote from @Zach Wain:

@David Maldonado - Chris is spot on.  If there is a lien/mortgage secured to the subject property, than its not a cash purchase.  It needs to be an unsecured loan, so nothing shows up on the title report as attached to the home.  If the loan is secured to a different property, that is fine as well!

Another idea if you have a good (well great) network of HML's/friends with capital, is for someone to lend you 90%-100% LTV on a HML. And than do a cash out refi into a conventional loan immediately and repay the HML. You can also do a 1st HML at 70% and maybe a friend of colleague can be in second position, 2nd lien at whatever they are willing to do. Than you can do a non cash out refi immediately.

Or the easy path, as you said is to wait 6 months for the ADU to be built. Are there comps in the area with ADU's? Keep in mind the appraiser may give you a different value than you are hoping for if there is not any recent data/sales of homes with ADU's in the area. That can be a tough one for the appraiser.

Yeah it sounds like waiting is my best option, but then that also leaves me with a heloc.
As far as comps for home with a jadu and adu, there was none. I got in touch with the seller and he said the appraiser used the income approach and was able to use muli-family comps since CA SB9 "eliminated" residential zoning across the state. We have comps of homes sold, with at least 1 ADU or JADU, that sold 200k more than what the home would be worth without the ADU (homes in that neighborhood are in the low 500s.

Quote from @Issac San Miguel:

Yes you can used delayed financing w/hard money. It is treated as a purchase by most HMLs - my question would be, why not purchase with hard money instead of putting debt on the property after?

All the same steps are taken, whether funding occurs before or after the purchase.

Oh okay I see. The only reason I'd wait the 6 months is if I build an ADU to pull out the extra equity, enough times to where I wouldn't need hard money anymore. In my area, ADUs add a ton of value. I built a permitted JADU and ADU on my single family home valued mid 600s. A similar house down the street also had a JADU and an ADU. It went on the market for 5 days and it sold for $1,150,000.

Hey everyone,

I am considered using hard money to buy fixer uppers and then convert to long-term rentals with ADUs. The goal is to rinse and repeat. Does anyone know if purchasing a property "cash" , but with hard money, will qualify for delayed financing? 

If I go hard money, I need to have an exit strategy and I want to refinance ASAP when rehab is complete.

My other option is to wait the 6 months and by that time the ADU will have been built and will increase the value.

Quote from @Benjamin Aaker:

It depends on your partners and the upside. They are going to be the silent investors but in a partnership they are going to be taking on both financial and civil liability. Managing the deal is a lot of work, but you aren't risking any of your money. You could simply walk away, but they can't. In a partnership, all partners are responsible for the business. If there is a civil liability case that doesn't go your way, all three of you will be responsible. Those liabilities are a lot to take on for putting in 50% of the equity but only getting 1/4 of the profit. As far as upside, if the numbers are very promising, that might entice an investor to get involved on these terms. 

Thank you. I didn't consider the liability portion of it.

Hello,

I am working on a partnership with 2 other partners. I will be doing all the legwork and my partners are responsible for the funding.

This is how the profits will be split: Myself 50% Partner 1: 25% partner 2: 25%

I believe I am justified for the 50% because I came in with the plan, did all the work (I have a construction background), and will manage the property. The other half of the equation (the financing) was split between two individuals.

Does this seam fair? I want to make sure I am being fair before I present these terms to my partners.

Hello everyone,

has anyone developed a new mobile home park from raw land? Also, do 5th wheels qualify as a motorhome? What does the land have to be zoned for this project?

Thinking about buying land and installing rvs to rent. Just not sure how to go about this and what questions I should be asking.

Quote from @Dan H.:

For 4 units or less per lot the cap rate is not used to set value.  The value is based on comps.  Cap rates do not apply in your case.  Comps will be difficult to find.  This typically produces low appraisals.

I am a little perplexed on your statement about RSO. I am not an expert on L.A. Rent Control, but Costa Hawkins should apply with regard to any local rent control ordinance. Combine this with the state rent control ordinance and you should be exempt from rent control for 15 years after the completion of the unit that first made the unit a multiplex (your recently completed ADU).

In general, JADUs lower the value of the property.  It definitely does not make the property a triplex.  It can only be rented with owner occupancy.  I suspect this will be a negative value add option (meaning cost to add the JADU is more than the value that it will add).

I suspect splitting the lot will produce the better return, but you have to run the numbers.

Good luck

I think it depends, in terms of JADUs or ADUS value increase/decrease. My SFH has a JADU and an ADU and a house down the street similar to mine, recently sold for $1.15 Mil, in a neighborhood with average comps of $550k-$600k. The comps used for the property were triplexes. I spoke with their appraiser and he said since SB 9 eliminated residential zoning, he was allowed to use mulit family's as comps for properties with ADUs and JADUs.

Quote from @Enrique Villegas:

Does anyone in Orange County have any experience with an architect that specializes or at least has experience with garage conversions? I’m very interested to tackle his project as an owner builder to save money to use higher quality materials. I’m located in Huntington Beach, has anyone else done this before? Would love to hear others’ experiences.

I converted my 488 sq ft garage into a 1 bed 1 bath ADU all in for 31k as an owner builder (before SB 13 passed). It's definitely worth it if you have the time and construction knowledge.