ADU Garage Conversion or Short Term Rental

[Alex Ballesteros]

I recently purchased my first property in Compton, CA back in November... 2 bd 1 bath, 4,400 S.F lot with a 2 car detached garage (approx. 480 S.F). The property is a "fixer-upper" and in order to maximize rents it will need about $60K in renovations, and I am also considering converting the garage into an ADU. I will be self-managing the project (not using a GC), therefore, the total cost of construction + adding finishes, etc will run me anywhere from $80 - 100K & I would be financing the ADU with cash. On the other hand instead of doing the ADU, i am wondering if I would be able to find a deal and do a STR with the same budget, and how that would kind of play out in return to the ADU.

Let me know what you guys think on this... pros, cons? Why you would choose one option over the other ?