ADU Build + Financing

[Kyle Holden]

Questions for the community about ADU builds:

1) It seems that building an ADU does not add $:$ equity value to your existing property. On average, the numbers I am finding show a $0.50-0.70 equity increase per $1 invested. If building an ADU is a way to "force equity," it seems to be an inefficient way to do so. Can anyone speak to why this is?

2) Due to #1 above, I have found that the majority of lenders will not lend to build an ADU based on the post-build appraisal (companies like RenoFi are helping rectify this). They will lend against the current equity on property via a second mortgage or HELOC. Does anyone know of other lenders (beside RenoFi's lending network) that will lend against post-build appraisal?

Context - My wife and I own/live in a property in downtown Raleigh, NC. We are looking to build an ADU on our property (above a garage) to use as a STR/MTR. Design/Engineering and build estimates are complete. Exploring financing at this moment.