Socal - South Bay Purchase Fixer + Build ADU Plan Critique

[David Chan]

Hi guys,

My plan was to purchase a 2bed 1 bath house in Hawthorne or Lawndale for ~500-600k. Live in it while I do cosmetic renovations for 1 year. In addition, at the same time, I would drop 80k-100k to build an ADU around 500 sq feet out of a detached garage conversion (detached garage is common in the south bay). I figure that an ADU can rent for at least $1500 and the main house when I would rent for $2200-2500. After the cosmetic additions and ADU, I could do a cash out refinance and take out any equity. Even with the cash out refinance, I would have positive cash flow of roughly $500-$1000 per month.

The houses that I saw were mostly from the 1920s to 1950s that fit in this criteria. I'll be the first to say that I am a bit scared especially of the electrical or plumbing or just being taken advantage by a contractor. 

My skills are still very basic, I've helped my brother paint cabinets and do some flooring work. I feel confident enough to add recessed can lights but I don't feel comfortable doing any major plumbing or electrical work.

Would love any critiques of my plan.

Do you think I could build an ADU for 80k out of a detached garage?

Thanks so much