Building a carriage house for rental - Memphis

[Account Closed]

We recently bought a home in a high income/ownership historic area where carriage/back houses are pretty common. Our house doesn't currently have a garage so we are toying with the idea of building a 2 car garage with rentable living space above. Carriage houses in Memphis Central Gardens rent for anything from $550 - $950, (depending on size) and the renter base is usually a single professional working downtown or relatively close to midtown.

Right now, we are having an architect draft plans but I'm wondering about the best way to go about financing the build. Of course, the rent would help to subsidize the build and long-term, the structure would add value to the property but what options are there other than HELOC? I don't think a 203(k) is even possible for this...

Has anyone done something similar?

[Curt Davis]

I dont think you can get a mortgage type loan as you already have a loan on the main house.  You also need to make sure you can have one built in your area especially of its a historic area. 

If you can get a heloc that would be best but you will need to have a ton of equity in order to make this work.  I would guess this project could cost you close to $50k or more.