How are ADU's in Dallas appraised?

[Jessica G.]

Hey BP! ADUs are not as common in Texas as in other parts of the country. I'm looking at a possible rental in Dallas, that has a 1,000 sf unit at the back of the property. We would be looking to rent out the main house and the ADU separately.

I'm trying to evaluate this as a BRRRR deal. Does anyone have insight as to how the ADU will be appraised?

Thanks in advance!!

[Aaron F.]

@Jessica G.

I can't answer your question, but I will say that TECHNICALLY you can't rent out both the main house and the ADU. I did a deep dive into this as I was analyzing a deal and the ADU rules in dallas are written so that it must be owner occupied. So, if you want to live in the main house and rent out the ADU you can, and if you want to live in the ADU and rent out the main house you can, but in order to rent out EITHER ONE the owner has to live in the other. In fact, in order to get the certificate of occupancy the property becomes deed restricted to reflect that.

I’m sure people do rent out both, but the actual city ordinances, if the city decides to enforce them, seem pretty strict. I even asked the city because from the way it’s written if you wanted to househack the property, you wouldn’t be able to rent the house at all once you moved out because of the deed restriction, which is crazy to me. 🤷‍♂️