All Forum Posts by: Rick Albert

Hello Everyone!

Right now between my house and ADU, we split the water based on the square footage. When looking back, that isn't an accurate way to do it for a variety of reasons, plus it is a hassle every time to do the math and collect. Therefore right now I'm considering using a service for submetering and then billing separately (currently I live in the ADU and rent out the main house).

Does anyone have experience with this?  Anyone have any tips?

I looked into True Submeter but they don't service California and I am waiting to hear back from California Sub Meter.

Thanks in advanced!

It is my understanding that you cannot use the ADU for short term rentals in Los Angeles.

https://therealdeal.com/la/2019/10/29/while-you-were-sleeping-la-bans-granny-flats-as-airbnbs/

If you make the ADU all electric (like I did on mine), then you don't need to worry about splitting the gas. If you want to spend the money, you can split the water. If you don't, your water rates will go up because now it is considered multifamily. If you do split it, double check with LADWP but when I spoke to them a year ago they said if the units were split then you wouldn't be subject to the higher rates.

Hey Hannah,

I've been doing it in Angeles and worked out well, even when I had hiccups along the way. The big thing is in the more expensive areas, living for free is going to be tough depending on how much you put down. On my condo I put 10% down, fixed it up, and then immediately refinanced to get the PMI taken off. On my house, we did an FHA 203(k) loan and once finished did the FHA Streamline Refi and got about $300/month off the mortgage. It just takes time.

Happy to chat further about it if you would like.

Best,

Rick 

If they are all brand new, keep in mind (for now) they are not subject to Los Angeles rent control and for the first 15 years not subject to state rent control.  That is a big deal for investors as the LA rent control can get complicated and restrictive.  That in itself has value.  Plus, as everyone else is saying, demand is high and there is such a shortage of housing. Across the board I'm hearing from my investor clients that places are renting quickly.  On my lease listing in Calabasas I had about15 showings in less than a week with four applications.  We listed it for $7,500/month.

I think it depends on what your goals are.  For example, Los Angeles is expensive, but if you house hack it creates a lower barrier to entry with less money down and a better interest rate.  That's what I've been doing and on my second house hack with a total of 3 doors (me living in one of them).

The big thing is to find nearby sales with ADUs.  I'm seeing about a $100K difference between houses with and without ADUs.  It would just be a matter of convincing an appraiser.  What lenders need to do is force the appraiser to only look at comps with ADUs.  From my understanding, they have the ability to do so, but won't.

Haha no one is perfect I guess.  However the most important part is the checks.

If I were to do it all over again I would have done a smaller project and paid the consultant to come more often to keep the checks flowing.

Hey Brian,

I purchased the property and built out the ADU by converting the garage. My wife and I live in the ADU and we rent out the main house. After we did the FHA Streamline Refinance, we pay about $1,323.10/month. There are comparables supporting between $1,600-$1700/month to rent it out. We want to refinance to take off the MIP before we move and rent it out. Once we do that, we will be netting in the range of $800/month.

I'm happy to discuss further if you would like as I would love to help.

Best,

Rick

@Matthew Porcaro

It was Home Bridge. It wasn’t the consultant because even he said this was the worst he has ever seen. Every check felt like a battle. Who did you use?

Hey Emmy,

My client has properties with ADUs that are completely rented out in Reseda and Mission Hills. I believe they both are before taking out for projected expenses. Once I refinance my house with ADU and take the PMI off, I would also be projected to cash flow between $800-$1,000 before vacancy and repairs/reserves. My property is in Granada Hills.

Happy to chat more about it if you would like.

Best,

Rick