All Forum Posts by: Nabil Suleiman

@Fahad Masud

The interesting concept with ADU should not necessarily be used to refinance cash out, but to increase potential cash flow. ADU's are great for the latter but not great for the first concept. If you want to utilize a BRRR strategy, then you need a small, cruddy SFH on a large lot hopefully in an up and coming or quickly appreciating neighborhood with a detached garage... take that home, add square footage to the front house so your comps are now in the maybe a 3/2 or 3/3 arena. Convert the garage into the ADU and now you have a recipe for an nice forced appreciation in comparison to other SFH in the neighborhood and the ADU can be used as a cherry on top for whatever the appraiser decides to add. If you are using large lenders like Wells, B of A etc etc, you should factor in 0 value for the appraisal because they are the worst, but if you have a private broker and they understand the area, and understand the appraisers standards in how to value ADU's (yes they exist) then you can have some value considered for it, but again.. don't rely on it, because a lot of appraisers dont put in the extra work to educate themselves on the ongoing ambiguity in our quickly changing market.

Anyways... Just my two cents. 

@Mylen Tansingco

Help in a few ways, I am an agent as well as an investor in LA. I’ve worked through the process you mentioned above, and guiding others as well. 

Yes, I would agree that working with a lender to find out your purchasing power will grant you the biggest perspective around what you can afford. It will help re-evaluate your options and maybe even the areas/ condition of your purchase. 

@Mylen Tansingco

Hi Mylen, and welcome. To answer some of the above. 

ADU's are not allowed to be on AIR BNB, but you can live in the ADU and air bob the other units.

is the 3.5% down so you can reserve the remainder of your money to do rehab work and add an ADU? aka will you have an average of another 80,000 and above on the lower end to do some work?

Love the strategy of forcing appreciation to get rid of the PMI. I have worked with a lot of people to achieve that goal.

Are you fully self employed? If so have you already connected with a lender to check out your potential $ approval ?

Yes on your able to apply for an FHA loan question. If you are not on the loan and your husband does not need to be on the loan with you on your next purchase, then you are fine.

It is very unlikely that you will find multi family that will cash flow in LA. You have to be creative and often times figure out ways to make those numbers work. Additionally as mentioned above you may also need to have cash reserves rot make that list above a reality. 

PS. when it comes to re-apprising properties wIth an ADU, there will be a lot of conversations you should have with your realtor about the potential and very likely issues that will come with it. So don't rely on adding the ADU as the thing that will remove PMI from your loan.

@Shawn S. Nice! Congrats man. My first place was a 1 bedroom, sold it after two years and it was the catalyst to my expansion in investing. You can for sure make a lot more selling it and investing it than renting it. I went through the same scenarios before selling. 

@Shawn S. couple of things to consider would be if its cheaper to move out if you are staying in the same area, and what Kris was pretty much mentioning above is that you can take that money and invest for a higher return than what keeping it will provide you. 

@Shen Wang

It will depend on the kind of tenants you want. I am a fan of La Crescenta if the area you are investing has those school systems attached. You will likely get longer term tenants (not guaranteed) but still a higher chance because they may want to utilize the school system for their kids. Tujunga can be a mixed bag, so it will depend on which part, I know they are right next to each other, but they are very different. 

@Michael Lao

Hi Michael, welcome and always happy to connect with locals. 

@Marcos Cordova

Hey Marcos, I know the area well and have done a lot with ADU's. Feel free to call me and I can walk you through exactly how to accomplish your goal for your mom and get her Retirement income in the process.

@Eliezer Duarte

Network with people doing it in the area, find out what they are doing. Partner with someone you trust, learn to run numbers on homes you think will work. By the time you do a few hundred you will learn pretty quick on what will work for you and your goals. 

But the discovery and exploration about your goals is going to be number one as you see what people are doing. I invest here, while others think I’m crazy and invest in South Carolina. Check out meetup.com for investor meeting (many online now). Those are my 2 cents.

@Aram Hamidi

I buy and hold in South Pasadena. If you are looking for cash flow, its not going to happen there without a lot of upfront capital. The "Crazy high" is because of the reasons you want to live there. The school system is part of it yes, but also the proximity to Downtown, the small community etc etc. 

Your best opportunity to get in and get close to a cash neutral or cash flow property there is to find something you can renovate and add a 1200 sq ft ADU to in the back. I almost bought one two weeks ago, and the price for the home was 970k built in 1932. That can maybe help you paint the picture for what costs are there. South Pasadena is also not developer friendly, and their city planning department is terrible, so just be aware of what you are getting yourself into before you choose to move forward.

If you care about schools and budget I would look at La Crescenta as an alternative.