investment advice on scaling current home

[Amanda Cano]

Hi y'all! My husband and I just discovered the BRRR method and have secretly and unknowingly been aiming to use it!

About us: we are late 20s young professionals who already are over working the 9-5 and looking to be full time investors. My husband is currently navigating his first year as a real estate agent while also teaching high school. I work in my field part time while also being a mom of 2.

In 2019 we bought a 2 bed 2 bath condo for 389k and sold it May 2021 for 499k after putting in 25k of renovations. We then bought our 2 bed 2 bath single family house in May of 2021 for 589k and put about 30k into it with a HELOC to pay for it. Both times we did 20% down payment. (Housing in extremely high on the central coast)

So, right now we have an appreciation value of 690-715k without appraisals on what we've done to it, purely appreciation value. We are considering taking out a larger loan to finish off renovations that would also absorb the current HELOC, about 137k at 6.8%. After absorbing the current HELOC that would be 107k leftover. We plan to use this money to renovate the 2 car garage into an ADU and then living in that while finishing the remodel of the main house. Afterwards we would Airbnb the ADU and live in the main house while we do a cash out refinance. Adding a 3rd bed and bath with upgrades should increase the value to about 900k.

My question is… should be do the BRRR method first before tackling a house hack? We were wanting to do the BRRR method after we do a cash out refi as to not feel overwhelmed with projects especially since we will be investing out of state. Does anyone have experience with ADUs? Long term goal will be to rent out both the main house and the ADU after some capitol gain. Looking at investing in Eastern Tennessee, North Carolina, or central Wisconsin. We are new to the investing game but interested in having a very large portfolio so advice is much appreciated - TIA!