Sharing my ADU BBRRR Investment results

[Cesar Perini]

Finding a profitable rental property in So Cal can be hard these days. With prices rising and people bidding 20-50k over asking, one could never cover their mortgage and expenses with a single rental property. Luckily in California we have the option to build an ADU (accessory dwelling unit). Since the state mandated the ADU laws in 2020 and made them way more flexible and feasible for investors, I've been on a mission to successfully complete a BBRRR by building an ADU. Buy, Build an ADU, Rent all units, Refi, Repeat. I bought an investment house last year from the MLS and I just finished my cash out refinance today. Here are my numbers…

Purchased: $600,000

Home type: SFH, 3b2b with detached garage and already rehabbed by a flipper

Built an ADU and JADU: $165,000 (740 sf ADU and 400sf JADU)

All in=$765,000

ARV=$908,000

CO refi @80% LTV= $720,000

$$ Left in the investment= $45,000

Rents:

Front unit=$2500

ADU=$2000

JADU=$1400

Total=$5900

Expenses:

mortgage =$3650 MIPI

Vacancy (5%)=$295

Maintenance (3%)=$177

Cap Ex (2%)=$118

Total expenses=$4190

Cash Flow=$1710/mo

NOI=$20,520

COC ROI= 45%

Approx numbers but you get the picture. Unfortunately I couldn’t pull out all my investment but having a 45% ROI that’s CAsh flowing $1710/mo is not too bad.

For those of you thinking about buying an investment property in so cal, building an ADU is the way to go!

[Jenna Stark]

@Cesar Perini thanks for sharing! This is awesome, I'm in Huntington Beach ca and considered a similar strategy one day. I think this post was less about details and more about the proof of concept! Did you have a hard time getting an appraiser to value the ADU? That's something I've been hesitant on! Thanks so much.