House Hacking with an ADU / In-law suite

[Brett Simmon]

Good Morning Everyone!!

Last year my wife and I purchased our forever home, this was before I found the BiggerPockets website and since then I'm looking at our forever home through a different lens. We have a 5 bed / 3 bath with an attached 2 car garage; there is also a detached 3 car garage. One of my ideas to get my feet wet into real estate investing is build an ADU / In-Law suite in about half of that detached garage. The ADU would have its own driveway, and back yard that is already partition with a lattice fence. My biggest concern is having my wife only a few yards away from a rental property.

Does anyone have any experience or advice with a rental ADU?

Would the ADU increase property value or is the detached garage more appealing to buyers?

Thanks,

Brett

[Orlando Perez]

@Brett Simmon

Glad to hear that you're taking this approach. ADU are a great way to get additional rental income. However, there are some challenges with local municipalities and the rate that they are approving them. Other than that, you can would benefit significantly once you build and place tenants in their. Regarding your wife's concern about proximity, that is correct, however, you can also put barriers so that your can keep your privacy intact. Also, you may or may not want to manage the property (ADU). Consider a property manager, there are so many benefits to have that in your tool belt. Also, something to consider, if you want, you can do a cash out refi on you property. Now instead of your, lets just say 3 BD 2 BA dream home, you have that additional ADU, which is lets say 2BD 1 BA. Your comparables are 5 BD 3 BA. Which is significantly higher than what your original loan might be. So, in my opinion it would be good start to find out if you can actually do an ADU, than find a good Architect. Let me know if you need anything else. Best regards!