All Forum Posts by: Sebastian Marroquin

Hello! My name is Sebastian and I am a Realtor and investor in the Los Angeles area. 

I help people find off market homes, I help them renovate and also help them add second units (garage conversion ADUs and new construction ADUs). 

I'll post a couple of photos of our latest one for ourselves. 

We bought a home off market in an area that sells for $700k and we found it for $525k (now fixers like this one would be closer to $600/650k) 

Then we converted the garage to a 1 bedroom and 1 bath unit with about $80k that will rent for about $1800 per month. 

Anyone that lives in the LA area - more than welcome to reach out and see some of the projects we are doing in Claremont, Pasadena, Altadena, El Sereno, and Highland Park for now! 

I have been managing all the subs: I have some learning lessons - and do have all the numbers in our excel sheet. 

Currently we are at around $65k (I have to check my numbers and see if that is inclusive of building plans, engineering and city permit fees? I don't want to misquote on here) 

(the $65k: with a new driveway, One 20 foot block fence and new main sewer line that was broken and old (for the main home): aside from the ADU sewer line).

I say those 3 items are easily ($40k or more at retail prices) : and for us about $15k 

Project moving along! 

We should be done inside by the end of this week! 

will finish gravel and paint outside next week! 

Photos coming soon. 

Quote from @Wade Barnett:

Quote from @Gil Vaisman:

Contractor here... $150/sqft is optimistic to say the least. It's doable, but you need a full time crew working exclusively for you and the finishes are going to be low end, including prefab shower and pre-built kitchens. I am able to maintain costs that low on garage conversions. If you are able to make a secret sauce where those numbers are doable, you're going to break the market!

Hi Gil, I'm in LA and wondering what the cost per square foot typically includes when talking to contractors?   I have a two car detached garage that is currently has an unpermitted ADU that I want to add on to and bring up to code.  I'm thinking 900 square feet total, two bedroom two bath.  The lot is flat so it would be a pretty straight forward addition.   When contractors quote based on cost per square foot what is typically included in the that?  Does it typically include everything except design and finishing materials (tile, countertops, flooring, mini split, doors, lights, appliances, water heater)?

 about $200 to $300 per sq ft : going fair rate : for standard material minus permit and drafting /architect costs. (although I just saw some people charging about $400 to $650 per sq ft - but that Is high). 

We have continuously helped investors cash flow in CA (Los Angeles county ). 

We adapt to the market and are creative when needed. It was a lot easier of course with low interest rates, but the reality is that back then, many people were saying that you could not cash flow in CA even with 3.5% interest rates or lower, so.... if you were not buying then, you will definitely not be buying now... 

(disclaimer: I do not know what the market holds in the next 2,5,10 or more years) and I think every person has to either believe the market will be great or good or not and make decisions based on that believe). 

Just to give you a couple of examples: 

1. We have helped investors buy a single family home and turn that to 2 or 3 or 4 units (depending of funds available, zoning, etc ) and rent them out to long term tenants. 

2. We have helped investors buy a small single family home (700 sq ft) and then helped them add s footage, to increase the value and max rents. Then put an ADU on the property and rent it to long term tenants.

3. Same as #2 and rent it out to people that are not air bnbing the home. (so the owner does not manage the air B and B right... their tenant does). 

4. We also helped someone buy a home, renovate it, then rent it out to people running an assisted living home from it :both parties are profitable. 

As you can see, yes, you have to be creative and have a team of people that can help and the funds to do these things. But the opportunities are out there. 

Depending on how much you have for the investment : I like ADUs, I like additions, I like off market homes and I like several cities in Los Angeles county and riverside, Palmdale, and other notable cities :) 

Reach out if you need me! 

You are the perfect candidate to invest here in CA. 

The speed bump for most people here is income. 

If you are saving $150k + per year, you would be ready to start in 2 years. By year number 3 you would have $450k if you don't already, and that you can grow rapidly here in CA with appreciation, Value add, price per sq foot... 

There are many cities out here where the price per sq foot is over $600. Where you can buy a home at 5% down, for $800k and you can infuse $300k into the property and that home would be worth about $1.5 once you finish. 

This same home would rent for much more than the the mortgage payment would be (even with interest rates in the 7s) 

Compare buying a $200k home out of state VS a home in CA (say highland Park, or Pasadena, Altadena etc) : see the projections for the next 5 to 10 years from a cash flow, appreciation, depreciation , loan pay down and tax benefit perspectives, and the MATH does not lie. 

example: 

purchase : $800k 

Down payment + closing costs @5% : $55k 

Reno : $50k 

ADU: $100k

Make home bigger (500 sq ft) or JR ADU: $100k

other costs : $100k 

Total : $400k 

Total for home and construction costs: $1.2 (you could even use a construction loan with a 3.5% FHA loan)

Home value : $1.5 or more 

Mortgage now: (7% interest) $6,500 

Rents : $7,500 ($1,000 gross cash flow + $300k + Equity) 

Mortage later at 5% interest: $5400 (cash flow then : $1900 ) 

Once interest rates come down, you could refi and take money out and do it again. Or simply rent them out and go for your next investment, or sell them for a profit and now you have 

your original $400k plus another $300k : $700k total and use a portion of that to buy out of state while you keep using the high values out here to increase your buying power. 

(I am using these high numbers only based on the information you gave us above. You said to us that you were a high income earner). 

Anyone else making $150k or $100k per year, would have to pivot and change this plan to meet the resources available to them. 

This is exactly what we are doing currently and next we will be turning 1 SFH into 4 units.

hello! 

For starters, you have to know that you can be successful in both! I bet nursing school was tough and you did that! :) 

I would suggest for you to shadow successful agents in both commercial and residential. 

Most people in real estate came from a different career, so you won't be the first or the last. Real Estate takes anyone who is breathing ;) but only the ones with motivation and good energy stay! 

There are so many branches to each, that it is a bit difficult to choose from both. I have only done residential in the last 12 years, but have done a couple of deals with partners in my office for commercial and I can tell you, that commercial has a lot more math, less emotional and more detached than residential. 

Residential could be the same depending on your audience and what you choose to focus on. 

I do a bit of both in that, I help buyers, sellers (more emotional usually) and also help investors flip homes and buy rental property (a bit less emotional) once they have some experience and are on their 3rd or 5th home! 

Ask realtors if you can do "a day in the life" and shadow them on a regular ... mundane day, with no high highs and no low lows! You will get a sense of what the work entails and could make a decision based on that! 

I love what I do and because of my personality, I am leaning towards an investor heavy business and developing projects myself! 

Here if you have questions any time. 

Sebastian (Pasadena, CA) 

Depending on many factors: 

1. You could buy a fixer: renovate, add ADU and then refinance to get your investment of cash out or most of it and then rent it out.

2. You could get a renovation/ construction loan: Do the same as #1 above : and only come out of pocket a small down payment - then refinance once value is higher or keep the loan if it makes sense. Usually interest rates are higher… and why I say that… 

3. You could do a hard money loan: buy the home, add sq footage and an ADU and then refi into a 30 yr loan once the home can be rented out to cash flow.

4. You could buy as a primary home initially: with a 5% down payment: go for something in the $350k to $400k that has about 1800 sq ft: and then convert the 400 sq ft of the main home into ADU: and rent both as separate units (live in the smaller one and rent the second one) or rent both after the minimum time you have to live in the home as a primary.

For all of these: you should be able to purchase with 5% down or lower. 

DM if you like. I can put you in contact with great lenders and realtors that can help! 

Quote from @Jeff S.:

@Sebastian Marroquin

Here’s some advice from an experienced investor who has been going to real estate meetings regularly since the mid-2000s.

• Free is not the goal. We want content and the opportunity to network. With exception of the sales-pitch-heavy, for-profit real estate clubs, everyone understands that there are expenses associated with a meeting. Charge a nominal fee. Perhaps $10 or $20. Few except those you probably don’t want, will have a problem with this. It will also separate the wheat from the chaff.
• Advertise on Meetup. There’s nothing wrong with advertising on BP, but if you only do it here, you’ll only attract those who frequent this site. There are a few other BP-related clubs in LA that I have attended. Almost all attract newbies with no experience. What’s the point of going to a real estate club to meet others who are brand new and have little to offer? I quit wasting my time at those.
• Meetup will also provide a meeting notice attendees can add to their calendars. BP doesn’t do this. I suspect many here who said they would attend, forgot because they had no calendar reminder.
• Arrange a speaker. You shouldn’t have any problem finding other investors willing to educate others. Once you start attracting members, the topic won’t matter so long as it’s varied and of high quality. Make sure to leave plenty of time for networking before and after the speaker’s presentation.
• NO SALES AT THE FRONT OF THE ROOM. Leave this to the for-profit clubs that attract those on the real estate speaker circuit. They will contact you. Tell them to take a hike.
• Don’t expect to make money running a real estate club. Ask anyone who does this. You will gain instant credibility standing at the front of the room and many will bring deals to you. That’s your main benefit.
• Attend Christina Suter’s FIBI real estate club, also in Pasadena, to see how it’s done correctly. Talk to Christina.
• Be patient. It takes time to grow a real estate club.

I appreciate the feedback. I agree with almost 100% of what you said. I have done these groups in the past and had good results for the group and also closed a couple of deals from realtors or other members bringing me deals. This is meant to be fun, but Hope also educating people and myself on projects/ deals “above” my experience. 
I do have a large network of vendors and investors that could speak at these events/ meetups. 
for now, it is trial and error and maybe will move the meeting later to our office’s conference center that I can use for free and why I would not like to charge… (although there is truth in holding people accountable and when they pay, even just $5, they tend to come and not ‘forget’ the meeting time and date :) 
seriously, thank you for taking the time to comment. Hope to meet you at at our next one. 
question: what would you, as an avid investor, would be looking for from a meet up like this? 

Quote from @Brad S.:

@Sebastian Marroquin

Hay Sebastian, I'm sorry I wasn't able to go to this meetup. Are you planning any more?

 https://www.biggerpockets.com/forums/521/topics/1138468-free-no-sales-of-any-kind-meet-up-at-the-hilton-in-pasadena