ADU build or not to build? ROI or family?

[McKenna England]

Hi Everyone,

I am happy to have found this community! Here is my quandary. I will be approaching retirement within the next several years. I am considering building an attached ADU to supplement my income. Unexpectedly, a relative has moved in with her two young children. She needs help with the children. In addition to supplementing my income; I am also considering building the unit to give her and the children a private space. If I build the unit I will not be able to charge her full price for rent because it is not within her budget. I am considering building the unit anyway and charging her significantly reduced rent. Which means the return on investment will be low. The contractor verbally stated he will charge $80k to build the unit. I am considering building the unit anyway. I want to make a good business decision while at the same time I have family that is in need of help. I am wondering if the tax benefits overtime will help to recover the cost of the build?
Any advice will be appreciated.

Thanks,

McKenna

[Jaron Walling]

@McKenna England "I will be approaching retirement within the next several years..." 
How much investing experience do you have? Building an ADU has pros and cons but increasing wealth and tax benefits don't top the list. I would evaluate your property, comparable comps with ADUs, and see if the investment is truly worth it. It would need to boost the value on your property or I would never consider an ADU. I'd guess it needs to rent for at least $800 per month (1% rule of thumb) for it to make since.

I'd try to eliminate the emotional side of the investment and see if it truly makes since. $80k invested in a mutual fund, stocks, or other investment accounts compounded over the years is a lot of money.