[Calc Review] Help me analyze this deal

[Randall Demary]

First RE investment! I'm selling my current residence and buying a new construction with a Jr ADU. VA loan & clergy housing tax benefits let me cut costs even more - thinking about the BP "unfair advantage" concept. JADU needs some tweaks but doable. Probably only about 10K worth but put it at 20 for good measure. Location is in Woodland, just outside of Sacramento. Lots of influx of folks from the Bay and plenty of students so the market seems solid.

Would love to hear any thoughts, feedback, etc. 

View report

*This link comes directly from our calculators, based on information input by the member who posted.

[Dan H.]

Some thoughts:

• If I have $20k value add costs, my usual conservative minimum added value is $40k (you are projecting $30k which is not close).  You state you are conservative on the $20k expense which is good.  However, for the work and risk of $20k effort, you should be projecting at least $40k of value add. 
  
• I am not a fan of JADU due to owner occupancy requirement and how it limits exit strategies.  How certain are you that you want to live there long term?   Note short term would have selling costs eat much of the appreciation and thinking short-term appreciation is guaranteed is risky. 
  
• Maintenance/cap ex of $160/month for two units is less than I allocate for one unit.  
  
• how confident are you of the $1600 rent?   $1600 rent for $122k cost is outstanding. 50% rule would have this at >$400/month cash flow and this property far over 1% rent/value ratio (again very good)
  

If you are confident of your numbers and plan on living in the property for quite a few years, I think it looks good.  The value add is far worse than my expectations for my market, but your initial cash flow is far better than my market (percentage wise). 

good luck