Creative Strategies for Expensive Market

[Manco Snead]

Greetings good people,

I'm hoping to solicit some thoughts and ideas from those more experienced than myself. My scenario: moving to a smallish town in western Washington where the average home price is approx. $360k(Zillow). Real estate values have shot up very quickly, the inventory has shot way down(way down), and there is an extreme rental housing shortage. I want to buy, as I need a place to live, but also as an investment. My rough plan: buy a smallish house that needs some rehabbing and build an ADU on the property(ok in this county). Or separate a one-level into a duplex. Close to zero multifamilies come onto the market. Loan limit: $400K. Cash available: $50k.

The market is pricey and competitive so am looking at how I can see a return. Any thoughts or opinions would be much appreciated.

Thanks!