All Forum Posts by: Brad S.

 @Alberto C.  Please see my previous post above. 

A private or lender appraisal should not increase your property taxes. The tax assessor does not get these reports. The tax assessor may be able to increase your taxes, due to the improvements you made, but that has nothing to do with any appraisal you would get. They may get copies of any permits issued by your city, and send someone out to update their records, but I don't know how that works in your state and county. 

As far as getting your home reappraised for insurance purposes - to protect your investment:
It may be a good idea, but not necessarily needed. But understand, what you would be interested in is not the market value of your house, but the replacement cost of the improvements. 2 distinctly different things, and most fee appraisers are not well versed in detailed replacement cost. So, you probably would waste your money if you just got an appraisal from any 'ol appraiser. 

You would want to find someone who is up to date on current local replacement costs. Some insurance companies use third party companies to do insurance appraisals, which includes a cost segregation breakdown of a houses' improvements and features. They especially do this on higher end properties, to verify the correct coverage. But, again, this is a specialty, that not many appraisers do. Very few appraisers I have known do this. Many years ago, I worked for a company that did insurance appraisals, so I was trained in this, but the company I worked for used to compile their own cost tables, from multiple sources and it was not publicly available. 

So, bottomline, if that your coverage amount is a concern of yours, you may want to ask your insurance company about verifying that you have adequate coverage and see if they can assist you in getting a cost analysis or "insurance appraisal." I used to use a website for cost figures for my market value appraisals, but those are no longer free and probably not accurate enough for insurance purposes.
Hope this helps.

I am not aware of any HML that would go into 2nd position to make up for part of the down payment, even with a low LTV. I suppose somebody might, if the LTV was low enough, but most Lenders don't want to be in 2nd position. You may have luck with a friend or family member, or other private money lender, but it would most likely be expensive money.

And congratulations on having one of the most important issues covered - your monthly income (having plenty of excess). That's usually a big hurdle for many people. But, just because you can, doesn't mean you should. What I mean is, what is the big draw to get get this specific property. Is this a good deal. In real estate investing, you typically "make your money when you buy." Meaning, you buy a good deal, with immediate equity or a way to add value for additional equity. Or, is this an area where you really want to build a portfolio and similar properties don't become available often, or? 

This depends on your specific situation and goals. If you are just trying to build up a portfolio of good quality income producing properties, in a good area that will appreciate, and this one fits the mold, then it might make sense for your longterm goals. But, you do have an opportunity cost involved. If you are negative cashflowing (even only a year), you may tie up some of your resources, limiting yourself from pursuing a better deal that might come around during that time period. Or, you may open yourself up to other negative outcomes/expenses while waiting to turn positive cashflow. 

Generally, I'd say no, it isn't a good idea to do what you are thinking, but depending on your specific circumstances, it might work for your plans. I guess you can look at it as a retirement plan you contribute to, for a limited amount of time, until it starts paying off.

@Christopher Schult

Can you design some of the studio units in such a way that you can connect them to make a 1 bedroom (with 2 kitchen areas)? Similar to a hotel room, where you can open the doors in between 2 rooms when you have a relative or friend staying in the adjacent room. Then, you can have the flexibility if needed.

The market is fluid and does not go on and off, it is not black and white, but a continuing changing of light through a prism. Sometimes the light shines directly through, creating a beautiful rainbow and other times it may be darker and diffuse with a spattering of muted colors. 

Ok, that was way too deep and philosophical for a real estate discussion.  :P

My point is, it is fluctuating and I think it is smart to question what decisions to make, in light of current trends. I have read posts that say "you can't time the market, Don't wait to buy, buy real estate and wait," etc. But, I don't think they are saying just jump in the deep end of the pool, and hope the water level doesn't rise and drown you. 

I think experienced investors would say, be aware of the trends and you may need to alter how you underwrite (evaluate) deals, or focus on alternative strategies, depending on those trends. So, in the current environment, it might mean you be more conservative in evaluating deals or focus on different opportunities. Like value added opportunities, as you mentioned. In many markets these days, it seems risky to buy a property and just put some lipstick on it and hope to sell for a significant profit. But, acquiring a distressed situation and solving it or adding value to it, may result in a better potential. Like reconfiguring floorplans, additions, ground-up building, repositioning an str in the market, etc. And making sure a potential deal is underwritten more conservatively. 

Some investors I know, will also just change markets. So, if there local market fundamentals are not looking good to them, they might look to out of area or out of state markets for opportunities. Remember real estate is local. I know of markets near me that actually increased in the downturn, even though most areas appeared to go down.

interest rates are only a part of the picture. They contribute to affordability, which in turn influences demand. Basically, if people can't afford to buy, then they don't buy and demand falls. And if supply (inventory) increases, that may put downward pressure on prices. But, if supply stays static, there may be less of an impact. And there are other pieces to the puzzle and it isn't always straight forward. And the str market seems to move to a different fundamentals then the main RE market.

Go to NARPM.org

Got to "Search for a Property Manager" under the "Connect With" tab and put in Pasadena for city, CA for state and "20 miles" for radius. There are a few that come up with designations. I suggest checking which designations they have, go online and find a list of "questions to ask a property mgr," call a few of the mgr's up and ask them those questions. Decide on 1, 2, or 3, and get a few references (current and past landlord clients), and call them and ask them about their experiences, and then pick the mgr you feel best about!

Good luck!

............I have have good luck in the past, this way.

Yes, me. Send me a DM

You can get actual live rates based on your situation at these 2 lenders
aimloan.com or provident.com

Provident is typically the best rates for owner occupied properties.

Well, this is probably not going to be too helpful, but I had a similar situation many years ago. I was sold a 6-plex, and then found out within about a year later, that it was legally only a duplex. The property was converted long before into 6 units and it has been used as such for a long time. 

Long story short, I had the Seller help me with the planning commission, to get a conditional use permit, in order to have it be a legal 6-plex. I felt fortunate to have had that outcome, but I should've done better due diligence. 

In my opinion, most appraisers may not know the difference in specific quality and durability, but if it is new, they would consider that in their condition assessment. I personally notice these things when I am doing an appraisal inspection, but I have heard many homeowners tell me that other appraisers spend very little time and don't ask them any questions about their property and my guess is they (the appraisers) don't recognize some quality differences. 

I am sure that is not too helpful, but bottom line, it depends on the specific appraiser that gets assigned. For me, I like and appreciate the slate, but I  typically notice those things.

There are a couple of issues to consider here:

1) Legal - the local planning/building dept are the people that dictate what a "legal" bedroom is. Not FHA, VA, an appraiser, broker/agent.
In my experience (as an appraiser, broker, rehabber/builder), I have appraised and owned properties in which no bedrooms had a closet. Many years ago, it was common to have free standing dressers/armoires in bedrooms, with no closets, but that doesn't make that house bedroomless. I have limited experience in other markets, but in my markets, I am not aware of a closet requirement or window requirement, but there does need to be 2 ways to egress (exit) and some form of natural light (a skylight counts). 

That said, my job as an appraiser is not to verify local codes, there are a certain amount of assumptions we make. So, I may have a reasonable basis to call something a bedroom, but the local building dept may say otherwise. So, don't go by what an appraiser or broker/agent says, verify directly with the building dept. You really need to know the building requirements for bedrooms in a specific area, to be sure. Also, just because it may have the attributes of a bedroom, does not mean it is legally considered to be a bedroom. 

2) Marketing - Many properties are marketed differently. I have seen many listings that will include detached bedrooms in the main room count and many that will include non-permitted areas, etc. Their responsibility is to disclose that at or close to the purchase agreement, but just because it is listed that way, doesn't make it illegal marketing. 

3) Value in Use - Just because a room is not considered a "legal bedroom," doesn't mean it has less value. A buyer (or the market in general) may still see the value in that space, to be used as a bedroom, even if it may not be legal. So, generally speaking, bedroom differences may or may not have a significant appeal or value affect, to the market.

That said, I would still definitely use their marketing it as a 5 bedroom house, as a negotiating point. And, I would meet the appraiser when he does the inspection and explain that the basement rooms, may not be legal bedrooms and also point out any other "facts" that may help your case.