Accessory Dwelling Units
What the hoo is an ADU?? Maximizing your Southern California Real Estate
Have you heard of an ADU?
Accessory Dwelling Units are additional legal units on your property, and they can help you earn BIG bucks. If you’d like to run a duplex or generate additional income without buying an entire new property, then adding an ADU to your lot is a GREAT option. ADU’s can cost anywhere from 20K-200K, which is waaaay cheaper than a ‘unit’ in today’s Southern California real estate market. That said, not everyone has an additional 20-200K laying around to seize this opportunity, so let’s learn how you can use other people’s money to make some of your own!
Renovation loans are NOT construction loans, so if you have never heard of one… read on. There are multiple options for reno loans, so it’s about finding your best fit. Today we were at Eric C Miller’s Finance of America’s presentation and got some details & highlights for you. Finance of America highlighted how this process benefits you!
Orange County Renovation loan process in a nutshell:
Pre-qualification –> Offer Accepted –> Disclose –> Underwriting conditional commitment –> Assign Project manager –> Collect credit conditions –> Project Scope & bids –> Appraisal –> Clear to Close –> Sign Docs –> Close –> Begin Renovations
Fannie Mae Homestyle Renovation Loan
- Utilizes a construction project inspector sourced by lender
- No minimum in repairs
- Inspection prior to draw disbursements, up to 5 draws
- All repairs and improvements must be attached to property, and supported by appraisal
- Borrowers have 6 months to complete improvements
- Repairs must begin within 30 days. (it’s ok if permits are the delay…you can pull permits on a property you don’t yet own)
They can be FHA or conventional, and they are a fully amortized single close transaction. 98% of the time they appraise on resales, so don’t worry if you’re buying resale.
FHA 203K – limited
- nothing structural,
- limit of 35K,
- repairs must be completed in 4 months
- limit of only two payments to each contractor
FHA 203K – standard
- can tear down the entire property but MUST use the entire foundation
- utilizes a HUD consultant.
- 6 months to complete improvements
- can loan up to FHA limit for the county, high balance eligible
- owner occupants only
- Contract lingo: “The borrower has applied for Section 203k financing, and that the contract is contingent upon mortgage approval and the borrowers acceptance of additional required improvements”…this must be in there, but is not necessary in the purchase agreement.
Things to know & next steps:
- Choosing the right contractor and renovation team is critical! Always get multiple quotes. If you’re looking for a forward thinking Orange County ADU company, check out RC Smith Design & Build.
- 30 day escrows won’t fly, renovation loans take 45-60 days.
- Reno loans are TOUGH. You’ve got to coordinate bids, contractors, and make deadlines. If you’re looking for an ‘easy button’ into homeownership, this may not be it đ BUT then again…you could try buying one of these Amazon ADU’s and avoid MOST of the contractor back and forth đ
- ADU regulations are different and ever-changing. Here’s an OC ADU resource to get started. Always check with the city to find out your guidelines before beginning work or submitting offers!
Did you know most people spend 15K on their home the first year they buy it, and they statistically put it on credit cards? Ouch. Don’t be that guy, there’s a better way! Call or text Angie to start exploring your best ADU options at 949-338-7408 or email Angie@AskAngie.com
Crypto, ADU’s, & Homeownership Day 2019 – Register Here!
Want to learn more about Real Estate?
Our annual Homeownership Day & OC Home Fair is right around the corner! We are hosting at Chapman University for the 7th year in a row on January 19th, 2019 from 10 AM – 1 PM!
Orange County Young Professionals Network, Chapman University, Orange County Realtors, and local nonprofits are putting this event together for YOU. Homeownership Day is completely FREE and taught by seasoned professionals who are passionate about helping others to change their lives through homeownership and work towards building their future.
Biggity BONUS:::::::Each attendee will be entered to win $1000:::::::courtesy of Orange County Realtors.
Homeownership Day is âchoose your own adventure styleâ, where you attend only the sessions youâre interested in. This year offers twelve classes over three sessions – pick from four during each time slot! When you register online at OCHomeFair.com you are able to choose which class you want to be in during each time slot. Some of the highlighted classes this year include:
- Buying Your First Home
- Taking Advantage of ADUâs and Granny Flats
- Preparing for a Market Turn – How to Protect Your Family
- Investing to be an Automatic Millionaire
- Buying with Cryptocurrency – What you Need to Know
- Reverse Mortgages
- ++++ so many other great learning opportunities that will help you get ahead. Â
Learn Property Down Payment Hacks from the Best
Participating Nonprofits include NeighborWorksOC and Affordable Clearinghouse – offering a panel on grants, down-payment programs, and more called âFinding Funds to Buy Your Homeâ. If you are currently renting, these nonprofits are here to help YOU! Veterans Association of Real Estate Professionals (VAREP) will also be hosting a class for veterans to take advantage of their housing benefits. Furthermore, Women in the Housing & Real Estate Ecosystem (NAWRB), will be featuring chairwoman Desiree Patno as a speaker.
Buying A Home with Bitcoin?
Featured in Forbes, Entrepreneur, & Inc Magazine, cryptocurrency transaction expert Piper Moretti will teach âBuying with Cryptocurrency – What You Need to Knowâ. As crypto becomes the mainstream, itâs important to know what to expect and how to protect yourself from cyber-fraud.Â
Travel much? As the world continues to shrink, Spencer Hoo is a Certified International Property Specialist (CIPS) active in Orange County Young Professionals Network (OCYPN) and Asian Real Estate Association of America (AREAA). This year Spencer is teaching our “Safely Buying and Selling International Real Estate” session.
Tired of Renting?
Orange County Realtors 2019 President Matt Clements will educate on Hassle Free Homebuying, and past Orange County Young Professionals Network chair Angie Weeks (yours truly!) will teach on David Bachâs book concepts to become âThe Automatic Millionaire Homeownerâ. This information is absolutely essential to anyone who wants to grow their real estate empire safely.
OC Home Fair is for Everybody. Homeownership Matters.
Whether youâre trying to buy your first home, or someone who owns multiple homes but is trying to grow your portfolio or buy internationally, our classes have real life applications to help everyone learn how to establish and grow a residual income stream. There is absolutely no pitching, anything to buy, or programs to subscribe to– just solid information presented by experienced industry leaders.
To join the next generation of real estate, and to educate yourself on all there is to know about safely building wealth with property, and for a complete colloquium list, please register online at OCHomeFair.com or simply fill out the form below:
We’ll see you at Chapman University on January 19th!
In the meantime, Letâs be InstaFriends! Follow us at @AskAngieTeam &Â @OCHomeFair
You can stay in touch with all of your connections youâll inevitably make at Homeownership Day at these by following these tags on IG & Twitter.
#OCHomeFair #HomeownershipDay
Read Full Post | Make a Comment ( None so far )ADUs making you profit in OC
Accessory Dwelling Units (ADUs)
Anyone else notice how California keeps getting more crowded and more expensive? It is just too beautiful to leave so ADUs are great ways for adding much needed space here. They can be known as in-law suites, secondary units, guest house and more. These are more affordable for California residents because they don’t require purchasing more land or structured parking. Adding a living space above your garage, a basement apartment, or a tiny home in the backyard are great ways to add extra living space to your home. They also have the opportunity for homeowners to make a profit by adding space. Legally adding these spaces onto your home makes it the same property as the main house. They can not be bought or sold separately. The placement of the ADU may be based on criteria such as adequacy of water and sewer services and the impact of traffic flow and public safety. Some of the restrictions that may come up are parking, height, setback, lot coverage, landscape, and maximum size of that unit. Also if any of the homes are listed in the California Register of Historic Places that can change what you are allowed to do when it comes to adding and ADU.
How to make a profit with your ADU
Did you know the average rent in Orange County is currently $2,500 a month? What would having that amount of money extra in your pocket do for your budget? New law changes as of January 1st, 2018 allowed for home owners to turn their single family residence into a duplex or multi family home in order to rent out one half to make a profit and provide more housing for California residents. The unit can only be rented, and not sold. This is such a great way for homeowners to make some money. Adding on to your home or remodeling to make a separate living space may sound like a hefty project with time and money, but with the rent prices increasing in OC all the time, we think it would be very worth it.
Real Life Scenarios
We spoke to a San Juan Capistrano retiree who decided to do just this in order to make some extra money while being retired. She bought a pre-fabbed ADU for around $60,000 and is renting it for around $2,500 a month. By doing this it will be paid off in around 3 years so she will be pocketing all of that rent money every month. What a perfect way for a retired person to make some extra vacation money or start saving for grandkids to go to college!
If you want more information on how you can add an ADU to your property and what you could rent it for, fill out the form below.
