Real estate can be a rewarding investment strategy that can create abundance and wealth for those that do well. Although almost everyone has the potential opportunity to invest in real estate, not everyone will become successful. There are several traits you need to be a successful real estate investor. Through the power of self-development and determination, any inspiring investor can change their mindset and develop the traits needed to become a successful real estate investor.
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Patience
Too often, new investors eager to secure their first deal eventually may become trigger happy and purchase a deal just to get a deal done. There are many stories of investors diving into real estate and closing on their first deal just to get started but rather did not wait for the right deal. In real estate, your money is made on the purchase so any investor that isn’t patient with finding the right deal may experience a negative return on their investment. To become a successful real estate investor, as important as it is to take action, it is equally important to know when not to and be laser-focused on identifying the right deal.
Education
The best real estate investors understand that they must keep learning and educating themselves. Whether it is consuming new content from books or learning from peers or mentors, to continue growing in real estate, the best investors continue learning as much as they can about the industry. A lot of new investors think they can work with an agent and throw their money around to be successful in real estate. Unfortunately, this is not how it works. A real estate agent can guide you but every person interested in real estate investing should take at least half a year to learn as much as they can and determine their own criteria first. By staying humble and accepting the fact that a consistent educational approach must be taken when investing in real estate, only then can new investors develop the foundation needed to become successful.
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Personal Finance
Before investing in real estate, one of the most important traits to become successful in all aspects of investing is to have mastery over your own personal finances. That means the ability to save and manage your money, pay off debts, and have a high credit score. To be approved for loans to purchase investments, you must have a good financial track record. Without showing discipline over your finances, more likely you will have a difficult time securing the financing you need to invest in real estate.
Overall, the good news is that all of the traits that were mentioned can all be developed with a shift of your mindset. By staying disciplined and taking the time to refine and develop the above traits, you can increase your chances of becoming a successful real estate investor. Start your journey today by turning inwards.
Joe Arias
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping,R stands for RentalsandRetirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone. If I can do it, anyone can.”
From a young Latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
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I’m incredibly saddened by the firestorms in Pacific Palisades, Brentwood, Malibu, Santa Monica, Hollywood, Altadena, Pasadena, Ventura, and elsewhere that first became visible on January 7th, 2025.
The pain that I feel is much deeper for the Pacific Palisades region primarily because my two children were born there and we spent 10 years living in two different homes. Several of our family’s friends lost their homes in this fire and our family’s long-time church burned to the ground.
I’ve been fortunate to live in some nice regions in my life. However, I have always said that the Palisades was the most beautiful place where I ever lived.
As of January 13, 2025, the Los Angeles County fires have spread to over 40,000 acres with financial damage losses now reaching $150 billion. By comparison, this $150 billion damage estimate is more than THREE times the dollar amount for our nation’s all-time wildfire losses ranked #2 through #10 COMBINED.
#1. Los Angeles, CA 2025: $150 billion and growing #2. Camp, CA 2018: $12.5 billion #3. Tubbs, CA 2017: $11.2 billion #4. Woolsey, CA 2018: $5.2 billion #5. Oakland (Tunnel), CA 1991: $3.9 billion #6. Atlas, CA 2017: $3.8 billion #7. Maui, Hawaii 2023: $3.6 billion #8. Glass, CA 2020: $3.6 billion #9. CZU Complex, CA 2020: $3.1 billion #10. Thomas, CA 2017: $2.9 billion Sources: Kobeissi Letter, Aon, JPMorgan Chase
If the fire damage continues onward and compounds the financial losses, we might easily reach several hundred billion very soon, sadly. Please note that these are published property damage estimates and not actual insurance company losses as of yet.
The Pacific Palisades Neighborhood
Pacific Palisades is not officially a city by itself. It’s considered to be a “neighborhood” within the city of Los Angeles just like Hollywood and many other regions.
The most famous politician to ever live in Pacific Palisades was Ronald Reagan. Because the Palisades is not officially a city, they usually select well-known “honorary mayors” who may be quite famous such as the current mayor and actor named Eugene Levy. Other past honorary mayors have included Jerry Lewis, Mel Blanc, Adam West, Walter Matthau, Dom DeLuise, Chevy Chase, Rita Moreno, Bob Saget, Martin Short, Anthony Hopkins, and Billy Crystal.
Many of the hardest hit fire regions in Los Angeles County seem to be the “neighborhood or district” regions of the City of Los Angeles, which includes:
How will the city of Los Angeles cover these forthcoming bills from the firestorm devastation that has negatively impacted so many City of Los Angeles neighborhoods. Some of these neighborhoods may each have financial losses that far exceed the City of Los Angeles’ upcoming proposed 2024-2005 budget amount of $12.8 billion dollars.
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Home Values in Pacific Palisades
As of December 2024, here are the following home price details for the Pacific Palisades region:
* Median listing home price: $4.5 million * Median home selling price: $3.5 million * Median listing home price per square foot: $1,400/sq. ft. Source: Realtor.com
Let’s review some other residential property details for the Pacific Palisades through the end of 2024:
● Total residential properties: 8,960 ● Average age for single-family homes: 59 years ● Average square feet size for homes: 2,977 sq. ft. ● % of equity rich homes (Q4 ‘24): 43.64% ● % of homes seriously underwater with negative equity (Q4 ‘24): 1.66% ● Total foreclosure filings: 22 ● Total commercial properties: 176 Source: ATTOM
Insurance Risks and Claims for Homeowners
Insurance costs were recently more affordable in Pacific Palisades than in 97% of U.S. postal codes when measured against home values, according to a Reuters analysis of price data collected by the University of Pennsylvania’s Wharton School and by Zillow.
Many of the homes damaged in the Pacific Palisades region were older homes in the lower part of the town near the Village. A rather large number of individuals or families might’ve purchased their homes several decades earlier for $30,000 to $75,000. Additionally, they were protected by Prop 13 to keep a very low property tax base.
For example, as it relates to a low property tax base average for many of the homes in the Palisades, the effective 2024 property tax base was just 0.71% as per ATTOM.
California Insurance Commissioner Ricardo Lara issued a cancellation moratorium against homeowner insurance companies that insure properties in Pacific Palisades and in Eaton (Altadena and Pasadena regions), which is an unincorporated Los Angeles County area, shortly after the massive fires broke out. Effectively, home insurers are not allowed to cancel insurance policies in these fire regions for up to one year (subject to change), according to ABC7 News.
In the future, homeowners insurance premiums may rapidly increase for these fire-ravaged regions as well as for much of the state of California partly to cover all of the billions of dollars’ worth of insurance losses. There’s also a serious risk that some insurance companies may not financially survive and won’t be able to pay out any funds for damaged properties.
Several insurance companies have mobile apps where you can file your damage claims. If not, you should call your insurance agent directly for assistance. Please provide as much documentation for your real and personal property damage claims such as paper or digital receipts.
Photos of these interior items and exterior photos of the home can be quite helpful for your claims. This is especially true if you made interior or exterior property upgrades since you first purchased and insured your home.
Future Rebuilding Options
It’s way too early to speculate about whether or not the Pacific Palisades, or other fire-damaged regions, will allow the exact same zoning and usage allowances for homeowners wishing to rebuild.
It’s been claimed by some in the local Los Angeles media that homeowners in the Palisades may have up to two years from the date their home was destroyed to rebuild and keep their low property tax base. However, the future zoning and usage process may take a very long time, especially if there are any building moratoriums put into place to slow down or stop the new building process.
Over the past few days, I’ve seen local and state politicians discuss the possibility of speeding up the zoning and permit process. Yet, there are numerous local, state, and federal agencies with more power than most politicians who control whether or not a home can be rebuilt, or if the zoning must be changed to higher density with two or more apartment units.
These powerful agencies or groups may include the California Coast Commission, EPA, CEQA (California Environmental Quality Act), California Fish and Game, U.S. Army Corps of Engineers, the nearby planning and zoning commission, and the local city council. The cost to build in California is quite expensive due to permits, environmental impact study fees, and numerous required third-party reports.
Some homeowners may choose to walk away from their damaged homes, sell the land to investors or developers, or wait to build it themselves. In many expensive coastal regions, the land or lot value is worth much more than the home structure. If the homeowner cannot build with their own cash and self-insure, then they should make sure that they can find insurance that is somewhat affordable or not.
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Distressed Property Situations and Solutions
In California, a distressed homeowner who qualified for a purchase money loan to buy an owner-occupied one-to-four unit property can legally walk away and the lender cannot pursue you for any financial losses unlike many other states. This rule only applies to purchase mortgages used to originally buy the property and not for subsequent cash-out refinance mortgages.
Let’s take a look below at other potential financial solutions for homeowners or landlords who own fire-damaged properties or for other negative life event situations:
* Forbearance agreements: The lender agrees to postpone or delay their foreclosure actions with the delinquent borrower. Sometimes, these foreclosure postponements may last months or several years as we’ve seen with some past FHA and VA forbearance situations.
* Deferment: The lender agrees with the borrower’s request to delay or defer their delinquent payments until a later date. In some cases, the late payments and penalties are added years later when the loan may become all due and payable.
* Loan modification: The lender or mortgage loan service company agrees to reduce the existing interest rate and/or monthly payment amount so that the mortgage is more affordable as a way to avoid foreclosure.
* Loan repayment plan: Both the lender and borrower mutually agree to add unpaid delinquent payments and late fees to the existing mortgage which may slightly increase their monthly payments or increase the loan term to give the borrower more time.
* Reinstatement: After the borrower and lender agree to modify the monthly payments to avoid foreclosure, the loan is removed from foreclosure status and reinstated in “good standing.”
* Seller-financed sales: If the homeowner needs a quick sale to a new buyer who can effectively take over his monthly mortgage payments and give the seller some much needed cash, the seller may consider creating some type of wraparound mortgage {i.e., contract for deed or all-inclusive trust deed (AITD)} or “subject-to” property transfer in which the buyer receives the deed to the property that is “subject-to” the existing mortgage still secured by the property.
* Short sale: If and when the mortgage debt is greater than the current market value for the property (aka “upside-down” mortgage), the homeowner may consider contacting an experienced local Realtor who can help negotiate a discounted mortgage payoff with the lender when they find a qualified new buyer.
* Cash for Keys: During the depths of the last major national foreclosure crisis between 2009 and 2013 especially, lenders were offering delinquent homeowners upwards of several thousand to $25,000 + to vacate the home while not damaging it or removing appliances. Quite often, the homeowner hadn’t made a mortgage payment for months or years up until this “Cash for Keys” offer. For many lenders, this cash payment to struggling homeowners was considered more affordable for the lender than fighting the homeowner for months or years longer.
* Bankruptcy: For homeowners who are days or weeks away from losing their home at the final lender auction sale, they may consider filing Chapter 7 (complete liquidation of most debts) or Chapter 13 bankruptcy (a longer term workout payment plan over two years or so) either on their own with online companies for just a few hundred dollars or with the assistance of an experienced bankruptcy attorney. The bankruptcy filing could delay the foreclosure auction date by weeks, months, or longer. Please seek quality legal assistance first.
* Foreclosures: Please note that the typical foreclosure date timeline is close to four months from start to finish. In California (a trust deed or non-judicial foreclosure state), the lender may first issue some warning letters to the delinquent mortgage borrower up to several months.
The lender will then file a Notice of Default to start the foreclosure process. Ninety (90) days later, the lender will file a Notice of Trustee’s Sale while advertising one day a week in a local legal newspaper for three consecutive weeks. If the loan hasn’t been cured or paid with some new installment or workout plan, the lender could hold the final Trustee’s Sale (or auction) approximately 120 days (4 months) after the Notice of Default was filed.
In other states that are considered judicial foreclosure states, the foreclosure timelines may be similar or much longer, depending upon the caseload for nearby local courtrooms.
Key points: If your home was damaged or destroyed, you should consider freezing your credit for free with the three main credit bureaus at Experian, TransUnion, and Equifax. Due to increased identity theft risks, you might also change your passwords for your bank, investment, and pension accounts. If your utilities are no longer needed, please contact each utility company to cancel the service and save money. Please check with your legal and tax advisors before making any decisions.
Stay Focused on Solutions, Not Obstacles
Death, divorce, financial ruin, and/or losing one’s home are some of the most painful experiences in life that many of us have suffered and eventually endured.
The most common first reaction to horrific situations for most people is denial. It’s somewhat of a variation of the “fight, flight, or freeze” response that may hurt us more than help us. Many times, a person may freeze up and not be able to clearly focus on how to get through their negative experience.
In the well-known Five Stages Of Grief description about emotional reactions to traumatic and painful experiences that was first written by Elizabeth Kübler-Ross and David Kessler about the fear of death, the five stages are described as:
What we avoid in life controls us, so we must attack the negative situation head-on for the pain and fear to dissipate. The faster that you get through the first four states of grief, the faster that you will get to the “Acceptance” stage and find the most empowering solutions.
Best wishes for continued healing and new opportunities for solutions should you currently be in any type of negative situation like so many of my former neighbors in Pacific Palisades.
Rick Tobin
Rick Tobin has worked in the real estate, financial, investment, and writing fields for the past 30+ years. He’s held eight (8) different real estate, securities, and mortgage brokerage licenses to date and is a graduate of the University of Southern California. He provides creative residential and commercial mortgage solutions for clients across the nation. He’s also written college textbooks and real estate licensing courses in most states for the two largest real estate publishers in the nation; the oldest real estate school in California; and the first online real estate school in California. Please visit his website at Realloans.com for financing options and his new investment group at So-Cal Real Estate Investors for more details.
Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411.com or our Eventbrite landing page, CLICK HERE.
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Right now, you may be more focused on what you’ll owe (or receive as a refund) when you file your 2024 tax return in April than on tax planning for the new year. However, as you work through your annual tax filing, you should familiarize yourself with amounts that may have changed for 2025 due to inflation adjustments.
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Here are four commonly asked questions (and answers) about 2025 tax figures:
1. How much money can I contribute to an IRA? If eligible, you can contribute up to $7,000 to a traditional or Roth IRA (but only up to 100% of your earned income, if less). If you’re age 50 or older, you can make another $1,000 “catch-up” contribution. (These amounts are the same as for 2024.)
2. What’s the maximum I can contribute to a 401(k) plan through my job? The amount you can contribute is up to $23,500 to a 401(k) or 403(b) plan (up from $23,000 in 2024). Those 50 or older can add a $7,500 catch-up contribution (unchanged from 2024). New in 2025, employees ages 60 through 63 can make enhanced catch-up contributions of up to $11,250 in lieu of the standard $7,500.
3. How much must I earn not to pay Social Security on my entire salary? The Social Security tax wage base rises to $176,100 (from $168,600 for 2024). You don’t owe Social Security tax on amounts earned above this threshold. (Medicare tax must be paid on all amounts earned.)
4. How much can I give one person without requiring a gift tax return? The annual gift tax exclusion is $19,000 (up from $18,000 in 2024). These are only some of the tax figures that may apply to you. Contact us for more information.
MEET ROBERT P. RUSSO, CPA PC
Picture a typical CPA. Then, meet Bob. He’s only by the book when it comes to accounting, in his interactions with people, he jumps off the page. As the founder and principal of Robert P. Russo Accounting, Bob pleasantly surprises clients (plus the IRS and lawyers) with his proactive, caring, and interested approach. Bob’s authentic passion for both numbers and people is why his firm is sought after by everyone from solopreneurs to CFOs. And it’s what energizes his fast-growing team of top CPAs, who follow his lead by providing impeccable service to clients — without the CPA geek speak.
Robert P Russo CPA PC Certified Public Accountants 231 W. 29th Street (bet 7th & 8th Ave) Suite 500 New York, NY 10001 O: 212-279-9800 C: 917-207-9278 F:866-396-2310 www.robertprussocpa.com
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Properly prepared financial statements provide a wealth of information about your company. But the operative words there are “properly prepared.” Classifying information accurately isn’t always easy — especially as the business grows and its financial transactions become more complex.
Case in point: your statement of cash flows. Customarily, it shows the sources (money entering) and uses (money exiting) of cash. That may sound simple enough, but optimally classifying different cash flows can be complicated.
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Under U.S. Generally Accepted Accounting Principles (GAAP), statements of cash flows are typically organized into three sections: 1) cash flows from operating activities, 2) cash flows from investing activities, and 3) cash flows from financing activities. Let’s take a closer look at each.
Operating Activities
This section of the statement of cash flows usually starts with accrual-basis net income. Then, it’s adjusted for items related to normal business operations. Examples include income taxes; stock-based compensation; gains or losses on asset sales; and net changes in accounts receivable, inventory, prepaid assets, accrued expenses and payables.
The cash flows from operating activities section is also adjusted for depreciation and amortization. These noncash expenses reflect wear and tear on equipment and other fixed assets.
The bottom of the section shows the cash used in producing and delivering goods or providing services. Several successive years of negative operating cash flows can signal that a business is struggling and may be headed toward liquidation or a forced sale.
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Investing Activities
If your company buys or sells property, equipment, or marketable securities, such transactions should show up in the cash flows from the investing activities section. It reveals whether a business is reinvesting in its future operations — or divesting assets for emergency funds.
Business acquisitions and disposals are generally reported in this section, too. However, contingent payments from an acquisition are classified as cash flows from investing activities only if they’re paid soon after the acquisition date. Later, contingent payments are classified as financing outflows. Any payment over the liability is classified as an operations outflow.
Financing Activities
This third section of the statement of cash flows shows your company’s ability to obtain funds from either debt from lenders or equity from investors. It includes new loan proceeds, principal repayments, dividends paid, issuances of securities or bonds, additional capital contributions by owners, and stock repurchases.
Noncash transactions are reported in a separate schedule at the bottom of the statement of cash flows or in a narrative footnote disclosure. For example, suppose a business buys equipment using loan proceeds. In such a case, the transaction would typically appear at the bottom of the statement rather than as a cash outflow from investing activities and an inflow from financing activities.
Other examples of noncash financing transactions are:
Issuing stock to pay off long-term debt, and
Converting preferred stock to common stock.
In those two instances and others, no cash changes hands. Nonetheless, financial statement users, such as investors and lenders, want to know about and understand these transactions.
Help is Available
As you can see, deciding how to classify some transactions to comply with GAAP can be tricky. Whenever confusion or uncertainty arises, give us a call. We can work with you and your accounting team to make the best decision. We can also help you improve your financial reporting in other ways.
MEET ROBERT P. RUSSO, CPA PC
Picture a typical CPA. Then, meet Bob. He’s only by the book when it comes to accounting, in his interactions with people, he jumps off the page. As the founder and principal of Robert P. Russo Accounting, Bob pleasantly surprises clients (plus the IRS and lawyers) with his proactive, caring, and interested approach. Bob’s authentic passion for both numbers and people is why his firm is sought after by everyone from solopreneurs to CFOs. And it’s what energizes his fast-growing team of top CPAs, who follow his lead by providing impeccable service to clients — without the CPA geek speak.
Robert P Russo CPA PC Certified Public Accountants 231 W. 29th Street (bet 7th & 8th Ave) Suite 500 New York, NY 10001 O: 212-279-9800 C: 917-207-9278 F:866-396-2310 www.robertprussocpa.com
Thank you for being a part of our network. We want to wish you, your family, and team a Happy and Prosperous 2025.
With this in mind, we’d like invite you to our next live online event. Please note, the date of our webinar has been changed to Saturday, January 11th.
Friends, are you looking for new opportunities to grow your wealth through real estate? Join our exclusive webinar tailored for savvy investors just like you.
What You’ll Learn:
How to become a private lender for fix-and-flip and ADU (Accessory Dwelling Unit) projects.
Strategies to minimize risk while maximizing returns.
Insights into the thriving market of property renovations and ADU investments.
Step-by-step guidance on how to get started.
Webinar Details (NEW DATE):
📅 Date: SATURDAY, JANUARY 18TH, 2025 ⏰ Time: 11 AM PT / NOON MT / 1 PM CT / 2 PM ET 💻 Where: ONLINE
Whether you’re a seasoned investor or new to real estate, this webinar will equip you with actionable strategies to diversify your portfolio and achieve consistent returns.
Since 2007, Realty411.com has assisted top companies expand their visibility and grow their business. Contact us for a complimentary marketing session. Investors, do you have questions about real estate?
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Expert guidance on building guest houses, granny flats, casitas, pool houses or in-law suites and other small home Accessory Dwelling Units
The rise of the Accessory Dwelling Unit (ADU) has been nothing short of spectacular. Once a niche residential real estate concept, ADUs—often referred to as guest houses, granny flats, casitas or in-law suites—have exploded in popularity, transforming backyards across the nation. This surge in interest reflects a growing need for flexible living spaces, a desire to increase property value, a means to generate revenue, and even a solution to some housing challenges. Many of these builds also exemplify the ever-expanding role ADUs play in reshaping how Americans live, work, and connect.
Gone are the days of drab and cookie-cutter ADUs. Today’s designs push the boundaries of creativity, showcasing how even small spaces can be transformed into stunning, functional living environments. These modern ADUs are not just about adding square footage; they’re about enhancing lifestyles, fostering intergenerational living, and creating sustainable housing options for the future. ADUs also offer a myriad of opportunities to get a leg up in property value and generate income.
Modern-day ADUs aren’t simply small homes; they often stand as vibrant examples of design ingenuity, blending form and function to redefine what’s possible in compact living. Design concepts can demonstrate how creativity, thoughtful layouts and striking aesthetics can transform small spaces into luxurious, livable havens.
For a deeper dive into the value, benefit and process best practices related to ADUs, I connected with Paul Dashevsky and Jon Grishpul—Co-CEOs at Maxable—a national leader in resources for planning, hiring, building and managing ADU, granny flat and other tiny house projects—who offer salient front-line industry insights on some of the most common questions.
Q: First, how would you simply describe an ADU?
PD: An ADU is an additional small housing structure built on a property that already has a main home or main structure. They can be built on a single-family lot or multi-family lot, noting that duplexes count as multi-family. They can be garage conversions, stand-alone units, attic or basement conversions, or be attached to the main house. ADUs are exceptionally flexible, and most owners find that their use for the unit evolves over the years. To be considered an ADUs, the structure must contain everything required for long-term housing of at least 30 days. This includes a full kitchen with countertops and appliances; full bathroom; bedroom or sufficient space for a sleeping area if building a studio; private entrance ; utility connections including water, electric, and sewage. Think of an ADU as a regular home, just on a smaller scale, like an apartment.
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Q: What are the best types of ADUs?
PD: The best types of ADUs are the ones that align with your needs, budget, style, and property constraints. In my own professional experience, some of the most popular ADU types include garage conversion and expansion; detached or attached custom-built, above garage, and detached prefab. Garage conversion ADUs are excellent for homeowners that are looking for an affordable option and are tight on space on their property. Plus, you benefit from regulatory benefits. If your garage is found to be in poor condition, it may need to be demolished and rebuilt to complete your ADU project. A detached custom-built ADU provides the greatest flexibility among all options, though it’s often one of the more expensive choices. However, if customization is a top priority, the additional cost may be well worth it. An above-garage ADU preserves not just the garage, but the backyard space too. Most garages are not built to support a second-story, so the garage will need to be reinforced before construction on the ADU can begin. With that in mind, an above garage ADU is the most expensive option.
Q: Will an ADU increase my property value?
JD: Yes, an ADU will almost certainly increase your property value by up to 35%. An additional living space not only enhances the functionality of your property but also makes it more attractive to potential buyers. When building a garage conversion ADU, some homeowners are worried that losing their garage may deter some buyers. But, studies show that many buyers prioritize additional living space over a traditional garage, especially in urban areas where parking may not be as critical. The added value of an ADU often outweighs the loss of a garage, making it an appealing feature for future buyers.
Q: How Much Does it Cost to Build an Accessory Dwelling Unit?
PD: The cost of building an ADU will depend on your region, since labor and material costs vary throughout the country—or even any given state. One main thing to keep in mind is that building an ADU is going to be vastly different from building a larger main house. Every cubic foot counts since you have to fit so much into a smaller space, which means that the cost per square foot will be a bit higher. With that said, using starting cost is a good way gage how much your project will cost. In some states, ADU costs start at about $150,000 and can increase depending on lot characteristics, level of finishes, ADU type and even the time of year.
Q: Can the cost per square foot of an ADU differ, even dramatically, depending on the size and structural form?
PD: Yes, the larger the unit, the cheaper your cost per square foot will be. Detached units can be up to 1,200 square feet or larger if you’re converting an existing space. A 1,200-square-foot unit will probably be cheaper per square foot to build than a 450-square-foot unit. Building up is more expensive. Most people instinctively want to build an accessory dwelling unit above their garage. If your budget is tight, stick to single-story. Building up will add ~$50/square foot to your project. In most cases, a garage conversion is the most affordable way to convert space into an ADU. If your budget is modest keep the existing envelope of the garage, meaning don’t expand on the current footprint as this will add extra cost.
Q: Can ADUs be rented out to others should a homeowner want to utilize their ADU to generate revenue?
PD: Yes, you can legally rent out your ADU. However, the permitted rental duration may vary depending on your local regulations. For example, in California, long-term rentals—defined as terms longer than 30 days—are permitted in all jurisdictions. Most homeowners renting out their ADUs prefer one-year lease terms, as they offer stable income with minimal maintenance requirements. Rental terms under 30 days are often referred to as “vacation rentals” and are commonly listed on platforms like Airbnb and Vrbo. However, some cities prohibit ADUs from being rented for less than 30 days, so do always check your local-area regulations.
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Q: How long does it take to build an ADU?
JG: An ADU will take about 10 to 18 months to complete from design to construction finish. This will also depend on the complexity of your project. The general timeline of the ADU process entails design over one to three months; permitting over one to three months; and construction over eight to 12 months. If you are looking for a faster turnaround, a prefab ADU can cut the construction process to as little as one month. Modern prefab ADUs offer a wide range of customization options, allowing you to tailor the space to your needs.
Q: Are there permit and building code considerations relating to ADUs?
JG: Yes, You are required to obtain a permit before you can begin construction on your ADU project. The primary permit you’ll need is a building permit. A building permit explicitly grants you permission to make major changes to your property. Your general contractor will ask for this before they break ground. Your ADU will also need to meet local building and safety codes for housing units. These codes will vary based on your jurisdiction.
Q: How does one go about getting an ADU permit?
JG: The first step to secure a permit is to assess your property’s space, layout and zoning regulations to determine where an ADU could fit best. Next, unless you have experience designing ADUs yourself, it’s optimal to hire an ADU designer who will know exactly how to move you through the process. After brainstorming with your designer, he or she will then develop and draft your permit set to talk specifics, whch will be submitted to the city. This is a large 20-plus page packet of documents typically printed on 24×36 paper. This documentation allows the city to see exactly how your ADU will be placed, how it interacts with its surroundings, its impact on the neighborhood, and other relevant factors. That’s why these permit sets are so detailed and extensive. Luckily, your designer is responsible for drafting all of it. Once completed and with your sign off, your designer will submit the ADU permit set to your local city planning department to go through the permitting process. This will usually take one to three months depending on your jurisdiction. While you wait, this is a great time to begin vetting ADU general contractors. Once your building permit is secured from the city, you can then officially start building your ADU.
Q: Can I finance my ADU project?
PD: Building an ADU can be a significant investment, but there are several financing options available to help make your project more manageable. One option is a HELOC, or Home Equity Line of Credit. This allows you to borrow against the equity in your home, providing a flexible line of credit to fund your ADU project. You can draw on this line as needed and only pay interest on the amount you use. This option is ideal if you want to access funds gradually as construction progresses. Another option is a home equity lump-sum loan that’s secured by your home’s equity. This option offers a fixed interest rate and predictable monthly payments, making it a stable choice for homeowners who prefer a set repayment schedule. It’s ideal for those who need a clear and immediate amount of funding for their ADU construction. A third financing option is a construction loan is a short-term loan specifically designed to fund the building phase of a project. This type of loan typically covers the cost of labor, materials, and permits. Once construction is complete, the loan can often be converted into a traditional mortgage or paid off with other financing options. Construction loans can be ideal for those planning a major ADU build, as they provide upfront funds for the entire construction process.
Today’s ADUs aren’t just tiny homes; they’re often big on innovation, with many across the United States offering a masterclass in design ingenuity, space optimization and aesthetics. Some architectural and interior designs are so progressive, they are redefining what’s possible in small-space living, blending creativity with functionality in ways that are as practical as they are stunning. Looking ahead, the relevance of ADUs is only set to grow. As urban populations swell and sustainability becomes a central focus, the ability to build smaller, energy-efficient homes with reduced environmental impact will be key. Additionally, ADUs offer a pathway to fostering community resilience by creating affordable housing options that work for everyone—from young professionals to retirees.
For its part, Maxable is a one-stop-shop helping homeowners interested in ADUs get started and maintain project oversight, including a library of free educational resources about ADUs, matching service to connect you with pre-vetted designers and contractors in your area, an ADU e-course that provides a comprehensive overview of the ADU building process, ADU project management tools and other helpful resources. The company’s YouTube channel further provides informative videos on all aspects of ADU construction, from design and planning to permitting and construction.
With housing costs soaring, many homeowners are looking for creative ways to maximize their property value while providing additional living options. ADUs offer a flexible, cost-effective way to generate rental income, accommodate aging family members, or even provide young adults with an independent living space—all without the need for costly relocations or massive new developments. And, as cities across the U.S. relax zoning laws and streamline permitting for these backyard beauties, the path to building an ADU has never been clearer.
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A federal grand jury in Los Angeles returned an indictment yesterday charging a California man with evading the payment of his individual income taxes and obstructing the IRS in its efforts to collect those taxes.
According to the indictment, Gabriel Guerrero, a Los Angeles-based commercial real estate agent, did not timely file tax returns for many years. In 2014, he allegedly filed more than 10 years’ worth of returns but did not pay the amounts he self-reported he owed. When the IRS began trying to collect those outstanding taxes, Guerrero allegedly sought to prevent the IRS from being able to do so in at least two ways: by not depositing substantial commission checks he earned from commercial real estate sales into his bank accounts and using cashier’s checks to circumvent IRS levies of those accounts.
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The indictment also alleges that Guerrero further obstructed collection efforts by submitting false financial disclosure forms to the IRS, which significantly underreported his income and by not disclosing a bank account he used to deposit his income.
In total, Guerrero is alleged to have caused a tax loss to the IRS of more than $350,000.
If convicted, he faces a maximum penalty of five years in prison for tax evasion and three years in prison for obstructing the IRS. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
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Robert Redford, Sean Hannity & Sylvester Stallone made real estate news in December. Top 10 Celebrity Real Estate News is featured at TopTenRealEstateDeals.com.
Paul Newman’s New York Penthouse The longtime home of Paul Newman and Joann Woodward has hit the market for $9.95 million. The very popular 1950s-to-’80s couple used the 3,000-square-foot apartment with views of Central Park as their romantic New York pied-à-terre. Newman died in 2008; Woodward is still alive and living in Connecticut.
Jim Carrey Sells Magical Sanctuary The LA home Jim Carrey called his “magical sanctuary” has sold after almost two years on the market. The home has five bedrooms, six full baths, a home theater, and even an art gallery space where Jim displayed his own impressive creations. The home was most recently listed at $19.75 million.
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Sean Hannity Moves Closer To President Donald Trump Sean Hannity has moved closer to President Donald Trump, spending $23.5 million on a 12,378-square-foot home in Manalapan, Florida. The eight-bedroom, 10.5-bath mansion is located on both the Intracoastal and the Atlantic Ocean, about 30 minutes from Mar-a-Lago. Hannity sold his New York mansion in early 2024 for $12.7 million, telling his radio listeners that he was “done” with the Empire State and would be moving to the “free state” of Florida.
Lower Price On Rob Lowe’s House Rob Lowe has knocked another chunk off the asking price of his LA home. Originally listed in July at $6.575 million, Rob has now cut the price twice for a total discount of more than $1 million. The new asking price is $5.49 million for the four-bedroom 2,940-square-foot home in Beverly Hills’ Franklin Canyon neighborhood.
Robert Redford’s Serene Seaside Cottage Robert Redford has listed his Tiburon, California home for $4.15 million. Listed as “A Serene Seaside Cottage,” Redford bought the home with views of the San Francisco Bay in 2020 for $3.1 million.
Sylvester Stallone Buys Mansion For His Lucky Daughters Sylvester Stallone is a giving person, donating to several charities for children and military veterans. He is also very generous to his family, having just purchased an 11,644-square-foot home in the Hamptons for his three daughters to use. Now living in Palm Beach, Florida, Sylvester bought the eight-bedroom home in East Hampton sight unseen for about $25 million. The home came fully furnished, located about one mile from the ocean.
Michael Jordan’s Mansion Buyer The buyer of retired NBA star Michael Jordan’s 56,000-square-foot Chicagoland mansion is John Cooper, a longtime Jordan fan and real estate investor. On the market for over 12 years, the nine-bedroom home on eight acres is loaded with amenities, including an indoor regulation-sized basketball court. The home was originally listed at $29 million, before a long series of price cuts, until Cooper picked it up for about $9.5 million.
Jennifer Lopez Moving On, But Staying Put Jennifer Lopez may be finished with Ben Affleck, but she is staying put in the Beverly Hills mansion she shared with Ben. After their 2022 marriage, Jennifer and Ben spent months searching for their perfect blended-family home in LA before they settled on a $60.8 million, 12-bedroom home in Beverly Hills. With the divorce action, Ben and Jennifer listed the home for $68 million. That home has been on the market since July and is costing the ex-couple almost $300,000 a month in expenses. Ben moved out of the home several months ago.
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Historic Key West Property – Ernest Hemingway Stayed There Located just a block from Duval Street, a unique Key West property is for sale at $6.9 million. Originally a hotel with a Ford dealership on the ground floor, it was where Ernest Hemingway stayed for a month while awaiting delivery of a car in 1928.
Mary Tyler Moore’s Connecticut Home The Mary Tyler Moore Show was one of television’s most popular programs from the 1970s, starring Mary as an associate producer on Minneapolis’s low-rated WJM-TV. The show aired on CBS and won numerous awards, including 29 Emmy Awards. Mary’s longtime home in Greenwich, Connecticut is for sale at a reduced price of $16.9 million.
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As you look ahead to the promising investment landscape of 2025, it is essential to recognize the enduring value of certain assets that consistently outperform market fluctuations. One such asset is land banking—a strategy that remains resilient regardless of economic cycles.
In a world where trends come and go, land stands as a steadfast pillar of wealth creation. Investing in land offers not only a tangible asset but also the opportunity to harness its inherent potential. Whether markets rise or fall, the relevance of land remains unwavering.
Consider the possibilities that await you in this realm. By strategically acquiring land now, you are laying the groundwork for future growth and stability. Each parcel you invest in is not just a plot of earth, but a gateway to opportunities, serving both as a hedge against inflation and a platform for long-term prosperity.
As you embark on your investment journey in 2025, let land banking be a cornerstone of your portfolio. Embrace its transformative power and watch as your vision for financial freedom unfolds with this time-tested asset.
Join us for our upcoming webinar as my friend and industry expert, Marcella Silva shares invaluable insights and knowledge about this tried-and-true investment.
Register for Webinar on January 11th at 11 AM Pacific:
The Value of Land: Discover why land remains a timeless sought-after asset and its role in the broader real estate market.
The Future of Energy & Real Estate: Dive deep into the intersection of renewable energy and land value appreciation.
Strategies for Success: Learn how to position yourself advantageously in this expanding market.
Laws Behind the Land Rush: Learn about the mandates causing the largest land rush in history.
See you soon!
Linda with Realty411.com
PS: This is your chance to enhance your investment strategy and unlock a new world of investing. Register now to secure your seat.
Since 2007, Realty411.com has assisted top companies expand their visibility and grow their business. Contact us for a complimentary marketing session. Investors, do you have questions about real estate investing? Are you looking for a turnkey rental? Need a solid REI referral?
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