All Forum Posts by: Steve Graves

I was considering doing a flip on a recent purchase. To be honest, the tax liability scared the hell out of me LOL. I'm going to keep it for the cash flow and maybe sell after a year to not pay the big tax hits that come with flipping.

Congrats on beginning your property investment business. 

A good and trusted contractor is worth their weight in gold. I had to do a rush  job and my regular contractor was too busy to get started on the project. So I ended up hiring an unknown contractor and it turned into a nightmare. One of his crew I found out was sleeping in the unit. More of his crew were sneaking in the property at night and pilfering paint and other supplies. It gets better, the guy that was sleeping in the unit, I found out later, had a sister that could duplicate checks and debit cards. Luckily she wasn't  very good at it and it was easy to fight the 5k they tried to steal from my bank account. Needless to say I wait until my regular contractor is ready to start before beginning a new project.

Congrats on getting your project underway smoothly now.

Bank some more money and find a good deal on a 3+2. $100 of cash flow isn't going to be worth your time.

I'm confused at to why some folks on here are saying that adding an ADU will lower my property value. It's definitely the contrary. You now basically have a duplex for sale and that's an investment property. Always worth more than an SFR. I converted an attached 1 car garage into an ADU and the property already had a 2 car garage behind the home and ADU. Maybe it's an issue if there is no longer a garage but I still don't see that being a problem for a rental property investment.

I  have an insurance agent that handles my cars and rental properties. Find an agent that handles all of your insurance and the umbrella policy will cost a lot less. I think posting an insurance company is against BP policy so just find a good agent and they  will get one for you.

I'm in the process of converting an attached 1 car garage into a studio ADU. The main unit is 2+1. The architect plans cost me 3k plus Title 24 energy calcs. at $225 per unit. Submitting the plans next week and will have to pay more fees to the county of Los Angeles. You will need to use tankless water heaters since they don't approve old style water heaters in LA county anymore. I was told it's because SCE wants everyone to go solar so to go with an electric water heater I would have to install a solar system for the both units. I went with adding a new gas meter and that will end up being around 1k. A lot goes into an ADU conversion, such as the fire department has to go over the plans too and that can be costly if they want an 18in deep foundation between both units. It's been a real pain to get this far but once it's finished it will cash flow nicely. Just be prepared for a slow process from start to finish.

@Nghi Le if you have a hard money lender that will work with 10% down I'm definitely interested in talking to them. I've used the same hml for all of my rehabs and they're easy to deal with. I'm not in the expensive part of Los Angeles. I'm in north LA county and it's nothing like the big money deals in the city. I've talked to other HML's here and you still have to have some skin in the game. I would assume if I'm going to do a million dollar rehab and 10% down they would consider that enough skin in the game :-D

@Odie Ayaga 

Yes, for SFR and multi that need to be rehabbed. You'll never get an FHA or Conventional on a property that needs work. I did buy a foreclosure back in 2013 from the FHA website, called Home Path and I was able to do a 203k for repairs and a conventional but I've heard they're not offering that anymore since the economy improved. That loan was a 10% downpayment.

A  hard money lender will still treat you the same as a bank if it's your first time doing a hard money deal with them. They want you to have skin in the game so most will want a 30% down the first deal you do with them. I have one lender I use for all my purchases and now they will let me put down 25%. It's all about proving you will do what you say you want to do. It's a great way to go but not cheap at all but it will get you where you want to be as an investor.