To build in the backyard or not

[Miguel Ochoa]

Hello all I purchased a home in the east Bay Area with a good size lot 15sqft. I have been looking for deals to flip but my current best option is to build out in the back yard. There is no comps in the area that would support the build out. Rent are still good but I would want to sell and be cash ready. I could build an Inlaw unit save on fee and build out or build a 2 story house and be all in on my cash. What worries me is that if the comps don't come in all my cash will be tied up in the property. Could be a big move I will be attempting the build out my self so it will be a learning experience to do more build outs or add ons. What do you guys think about additions to the back of a house?

[Arlen Chou]

@Miguel Ochoa the fastest and the least cost prohibitive option would be to build an ADU better known as the "granny unit". I think you are already thinking about this option and its advantages. Your return on investment will really depend on the rents you can pull from a studio. You could even go the route of getting a "prefab ADU" and have it installed on your lot. The cost is apparently 5% to 25% cheaper then doing a traditional "stick build" or addition. Comps will tough to get if you there not that many in your area. However, I would assume the appraiser will just base things on the total sqft and number of beds/baths on the lot if they don't have anything directly comparable. This should at least give you some ball park figures to work with in your analysis.