All Forum Posts by: Clarence Johnson

Welcome @Marjorie

My most recent experience selling a SFR with ADU in Carson Ca resulted in a 30k price reduction for my buyer. There were no true comps and the appraiser gave the permitted ADU no value as a unit or even as livable sq ft. The seller was going to relist the property, assuming they could get a conventional buyer to pay more and I coordinated with my lender to order conventional (5% down) appraisal which surprisingly came in for less. We went with the FHA appraisal and closed successfully.

A few takeaways: My client was shopping for SFR with ADUs and some agents specified that you need a lender with ADU experience; not certain what this means but I'm assuming they want lenders with appraisers who know how to properly value as my lender has ADU experience but it only benefited my buyer. I have a colleague in LA who flips SFR's in the $800k-1mill range (with ADU's and they have never came in under value

FHA loan guidlelines do not give detached ADU's value.

Though ADUs produce income, lenders cannot use the income to assist with approval as they can rents for a duplex.

@Roman Rida glad to help, don't sleep on Inglewood lol

@Mike Akerly I'm currently working on building an ADU on my multifamily in Inglewood. The city is giving me pushback but are receptive to SFR ADU's and other new state changes.

Don't ask for repairs, ask for credit towards closing cost. Most sellers will fix those leaky pipes with bubblegum and you will be tasked with verifying the repair. Its better and will be better received to get a quote to repair, ask for closing credit and repair it yourself. Most sellers are not going to fall out of escrow for a slight decrease in their net. I have never seen an FHA deal die due to a leaky pipe, this is small and fixable. Just knowing where water is coming from is a blessing in disguise. I have had mystery water where the bigger problem is figuring out what is the source of the water lol. BTW, make sure you get a closing credit and not a price decrease as the price increase cannot help you fix the pipe, the closing credit is usually better received and results in decreased acquisition cost. What is your agent suggesting?

@Andy Fernandez have your agent calculate ARV. Also, ask the bank you plan to do the refi with, they often have valuation tools that may help you understand a ballpark value.

I favor Inglewood but agree strongly in regards to San Pedro and Hawthorne.  Sold my sis and her husband a San Pedro duplex a few years ago when they were priced the same as Watts.

Please share

@Charles Kao what exactly is a rental cert inspector.

Thanks

Chances of you getting money from a section 8 and cash tenant for trashing your place in Cali are about equally low.  Get a deposit and vet both, don't assume section 8 tenants are bad and do not assume your cash tenants are good.