All Forum Posts by: Brad S.

@Dannielle Givens

In my professional opinion, I think the house placement on a lot can definitely impact value, but not always. As a Broker, I have had Buyer clients that specifically wouldn't even consider putting in an offer on a specific house which was set far back on the lot, even though, I thought the house fit perfectly with their needs and desires. Even with the suggestions of putting a hedge or privacy fence, etc. And this was on a very quiet street in a great neighborhood, with no major noise or safety concerns. So, in a market where there are more buyers with similar reaction, than it will cut down the Buyer pool and may lower demand and affect the price.

As an Appraiser, I have seen price differences between similar sized houses and lots, based on one of the houses being far back on the lot, and therefore, limiting their useable backyard area. During my comp search, I would see the data seemed similar (gla, lot size, etc) but I would notice the prices were significantly different. Then when I would look on satellite maps and/or drive-by the properties, I see how the house was set far back on the lot, which limited their backyard space. So, 2 properties with equivalent lot areas, may not have similar useable lot areas, depending on how they are situated on their lot.

As others' have said, maybe in some areas or locations, it adds to the privacy of the house, being further back on the lot, but I'm not convinced of that, since, in my experience, most people want the privacy in their backyard, when they are outside near their pool or relaxing, reading, etc. If they have more of a front yard, they are more likely to get noise pollution while they are outside enjoying their yard. 

Also, there can be some other concerns based on planning ordinances and restrictions. Some areas won't let you have high fences or hedges in the front, thereby limiting the privacy available. In some areas, you can't build a fence or hedge above 3-4 feet in the front. Also, there may be building limitations. When we rebuilt our house a few years ago, we were limited to how far forward we could build, based on where other are located on their lots, on our side of the street. This probably would affect more if you wanted to move/addon to a house close to the front, based on the setbacks, etc. But, some people want enough space in front for a circular driveway or more car parking also.

But, as typical, it depends. One good way to research this is to ask multiple busy local Realtors in the area and see what their opinion is. Ask them if they have Buyers in the past that had a preference or if it was a deterrent, etc. 

Sorry to hear about your situation, it's never fun. I had a business partner "break-up" involving a house many years ago, so I kinda relate.

As to your questions:

1) (a) Based on what you wrote - purchase price $260k + $50k in renovations, and possible current value between $260-$290k. If you were to sell now at the highest price of $290k, your net may only be around $270k ish (after around 7.5-8% selling costs). So, it doesn't seem like there will be any gain or tax liability. The loan balance has no bearing on the tax liability.

2) No, you don't need to buy the house all over again per se, you are just transferring 1 person's interest to the other based on terms of an agreement. So, I do agree that you should consult an attorney for this. And you should probably speak with a CPA also. 

And you can structure this any way you two agree on. So, you can agree to keep the loan in place, in her name ("Subject-to"), with you agreeing to be responsible for the payments, etc. This is especially enticing since the rate is so low. But, you can agree to give her some part of future profits/equity or agree to pay her a lump sum to keep the current loan in place (maybe by getting a HELOC and paying her), or agree to give her a portion of monthly cashflow or anything you can come up with between you two.

To figure out a new payment based on a new mortgage, you can just use any mortgage calculator you find through a search and just put the down payment as $0. For real rates you can go to these sites and input a scenario.  www.provident.com or www.aimloan.com both are lenders with good rates - provident  typically being more competitive for owner occupied mortgages. I just ran the scenario ($290k value, $225k loan amt) on provident and got a rate of 6.375% with a lender credit of $281.25 and principal and interest payment of $1,403.71 

I'm guessing your payment of $1,385 includes taxes and insurance, because a $225k loan at 3% would be $948.61/month (principal and interest). So, your payment would go up substantially - about $450/mth as of today's rates. So, it would make sense to try and agree to keep the current loan in place, but I know that is a tough situation, since you will still be connected.

Good Luck

Quote from @Account Closed:

I finished a detached ADU on my LAR1 lot in 2021. This year I used SB9 2 Unit Development to permit a garage conversion on the property as well. So now the two houses will be Unit 1 and 2 and the garage will be the ADU. That was how LADBS handled it a few weeks ago. If you have two CofO's I bet you're legal with the city to also do the ADU.

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Does LA allow for 2 ADU's (1 for each unit) with SB9? Some cities do and some don't.

Do you know when the 2nd unit was built?
Have you checked for any permits for the 2nd unit? I would think there would be some relatively recent permits, in order for the 2nd unit to have a separate address. Did it already have 2 addresses when you purchased it? A second address doesn't make the property a duplex. ADU's require 2nd addresses, I believe. Have you checked with the planning dept and asked them yet?

Technically, with the R1 zoning you can have 1 ADU and 1 JADU (if the property is owner occupied), but you may be able to use SB9 (Senate Bill 9) to have 2 units on an SFR zoned lot and, depending on if LA allows it, an ADU for 1 or both dwellings. Check with LA to see if they allow an ADU with 1 or both of the units with SB9.

Also, don't confuse the Use Code with legal use or zoning. the use code is determined by the Assessor and the legal use and zoning is determined by the planning dept. I used to be a Deputy Assessor and we were taught to note what we saw in our onsite inspection, whether legal or not, so some records may show a duplex, when it might be an sfr with an illegal conversion or building. I remember many years ago, I inspected an R1 lot which had a main house, rear unit with commercial offices above, so I noted all the units on my inspection paperwork. So, on record it might show a mixed use, even though it was an illegal use. Bottomline, always go directly to the planning dept to verify the legal use of the property and to make sure what is there is legally able to be there.

Quote from @Alan Asriants:

Hey BP, I have been talking to a lot of investors purchasing for AirBnB and even headed out west to see some new construction being valued for its AirBnB potential. Do you guys think this kind of investing (STR) is sustainable.

Couple thoughts of mine of why I think it could be volatile: 
1. Traveling is sometimes a trend. Tiktok has made it cool to go to one place one month and then another next month
2. Heard AirBnb is getting more strict with their regulations - larger companies/hotels are now listing their properties there. 
3. AirBnb is getting more expensive. Recently found that it was $200 cheaper to use Booking.com than AirBnB. The nightly cost was the same. After all the taxes and fees being charged on AirBnb it didn't make sense for a short trip. Possibly for a longer stay it could be justified. 
4. People are buying very expensive homes (1M and up) and hoping to get crazy returns - recession could impact how nice of a place people would rent. I hear lots of people who own airbnbs are getting most of their requests from 20 year olds looking to party in their mansion. 

Would love to hear what people have to say!

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Sure, it's sustainable, str has already been around for many decades, before Mr. Gore created the internet. But it seems obvious that most people consider it a pure real estate investment, instead of what it really is. It's a business investment or opportunity, with real estate being a main asset of the business.  It's a hospitality business. The online platforms are just the newer shiny, bright objects putting the business in the spotlight. This creates a new cycle in the business, exposing it to more people. 

Now, that said, many str's are in traditional neighborhoods and some in vacation destinations. Those in more vacation areas will typically have more business risk, but owners sometimes equate that to real estate values. it seems that many people conflate the two.

Good question. I am not aware of any general state site that keeps track of that info. Permits are a local thing, per city or county. You'd probably have to check with the local planning/building depts where the contractor has worked, and see if they keep track of that info separately. In Los Angeles, I am not aware that information being easily accessible. I assume you have checked their references, or if not, call a few of their past and/or current clients. 

You probably already went here, but in case not, here is the CA state license board, so you can check their license. 

https://www.cslb.ca.gov/Online...

Quote from @Eric Feldman:

Columbus, Ohio Hard Money Lending Consultant Wanted!

Longhorn Investments is a multi-state hard money lender looking for licensed appraisers to complete subject-to appraisals in Columbus, Ohio and surrounding markets. Please let us know if you are looking for more business and what your turnaround time is. 

I am an appraiser in CA, but I can post something in the Appraiser only groups in FB if you like. Typically, the appraisers there are better than average, since they care about keeping in touch with the industry, etc. Let me know I am happy to post something if you like. and if so, let me know how you want them to contact you.

Quote from @Naz Hossain:

That won't affect appraised value, but it could affect the rentability of the home. Not a lot of people like gold fixtures. Brushed nickel, brushed chrome, oil-rubbed bronze, polished nickel, or flat black will all do well.

 Funny you said that. I got off the phone with an appraiser yesterday and they pretty much said the same thing. They talked about appeal and marketability

Longtime appraiser here. Exactly what they said. We will generally look at the current quality and condition and marketability. Generally, you want to be similar to the other rehabbed properties selling in the area. The popular style I have seeing these days are mostly modern/contemporary, and both chrome and flat black finishes work with that style. I'd be more concerned with upgrading the fixtures as opposed to the finishes. In other words maybe medium quality, but just not the cheap brands. But honestly, IMO I don't think most appraisers notice or know the difference as long as they are new and look good. But, I notice all that stuff, since I write checks for those during my rehabs.

My last rehab I used flat black in the master bath and kitchen and chrome in the guest and powder bath, and the light fixtures were chrome. I also felt I had to use black framed windows, since this was a high end remodel. But, I'd stick to the chrome, if I were you - not worth the extra money, the appraised value won't change. I'll attach a couple of pics. You can see the ribbon style I used, which are popular in modern styles today.

Master Bath Guest Bath

What are in CA?

Based on your info, it sounds like a great potential deal, especially, if they are repairing the pipes. First thing to do, RIGHT AWAY, is to LOCK IT UP! Get it under contract as soon as you can, with all your contingencies (inspection, appraisal, etc) and THEN work out the details. 

Also, in the future, learn to do your own valuation/appraisal, so you can smell a deal without outside help. Of course, if you feel the need, verify it with appraisals, BPO< CMA's etc.