Accessory dwelling units (ADU’s) San Diego

[Andrew Burkhart]

So long story short bought a house in San Diego county as my first rental property and I'm in the negative around 300$ a month so bad investment looking for a way to turn it around and have been researching ADU's. Wondering if anyone has done this, and if the juice is worth the squeeze to invest more to possibly turn my bad investment into a good one.

[Tim G.]

ADU's are one of the top plays right now, there are many variables but if it works. It tends to work well.

The costs are all over the place, you have owner occupants with equity that are being used as ATM's by designers and contractors who can provide the "be an investor HGTV" experience. You also have the investors with construction experience, who can commit to not overbuilding and they're coming in with some solid numbers. Under $200 a sq/ft 

Besides the above mentioned be sure to know how are you going to pay for it. Often the house does not appraise at a value that will allow you to retrieve those costs fully. But, it'll be very good cash flow. One perk to this is assessment values seem to be coming in very low, so your property taxes will be favorable. Also, consider how you build this additional unit while not interfering too greatly with your tenants on site. 

I am building an ADU at a property that currently cash flows $300 a month in Oceanside that I also consider a poor investment until the ADU is in then its going to be fantastic. There could be another play in which you build a 1200 sqft SFR with a garage, then later turn the garage into a Jr. ADU. Now you have three units.