Advice on Building ADU/Duplex

[Travis Smith]

Hello,

I own a property in Austin, TX where it seems difficult to get enough cash flow to make keeping the current house as a rental a good option (due to high property taxes, etc). I'm looking into options for tearing down and building a duplex or ADU and would love some advice on pitfalls, going with big builders vs smaller custom builders, etc, as a first-timer. We'd hate to just sell and cash out our equity if there's a better deal to be made in developing the property. Any Austinites have general pricing and outcomes on building projects of this type or know of some forum thread example cases I can take a look at?

Thanks!

[Aaron Gordy]

@Travis Smith

The city is pushing for ADU construction and are being flexible on many related issues. I converted a detached garage into an ADU last year. While it was complicated at times, we were able to achieve our objective. It was 900 sq ft. The costs were about $60k to convert it. Keep in mind that I was the GC and I am able to keep my costs down given many years in the real estate industry as a broker, property manager and remodeler/flipper when the opportunity presents itself. I also have friends in permit department that made it easier to get questions answered as well. The analysis the value of creating an adu or even a duplex should be dependent upon the area. I am not sure of the are in the city that you are referring to.

My two cents are if you go through the trouble of building an adu/duplex then you might as well keep it. Sure the taxes will go up but that is just reflective of the overall price increase in the structure. The rent will also go up accordingly as well since will have two rental properties as compared to one rental unit. Keep your winners and sell your losers.

Pm me and we can chat further. Or if you would like to meet for coffee then I am always interested in such projects!