Adding an ADU to a 4 plex

[Robert Johnson]

Hey BP,

I just bought a 4 plex last month with an FHA 203k loan last month. While I have been fixing up the property I've started to really think about converting a old brick storage building into a possible ADU and running some short term rentals out of it. Im estimating it would cost about 20k to do the renovation, but it's a very small space (160sq ft). I would estimate I would rent it out for about $30 a night on the low end. What are your guys thoughts?

[John Underwood]

$30 a night? I don't see this as worth while. 

I personally have plenty of money and this does not motivate me at all.

You finances may be different and $30 may impact your income.

Plus what do you think the occupancy will be on this tiny house? What is your projected payback be in years on this?

I just bought a condemned house for 10k that I just finished rehabbing. I have it rented for $1100 a month and this will be very passive as everything in it is new. Cherry on top is my ROTH IRA owns it so I will never pay income tax on the income or the forced appreciation.