ADU project feedback please! (Southern California)

[Huck Lin]

Hello, I'm new here (apologies if this is the wrong forum). What do you guys think of this project?

I'm having a hard time finding any cash flow investments in Southern California where I live. The prices of the houses out here makes them just appreciation plays, it seems. I'd like to keep my rental property close to home to make it easier to self manage so I don't want anything far away, like in Ohio. Now that you have the background, here is the project I am thinking of:

I have space over my SFH garage and 1st floor to build two studio units (technically one ADU and one bedroom expansion to be converted after) 1100sqft total. I am in an excellent school district, right next to the tech hub, right next to the university. It's very rentable and I foresee rents continuing to increase, though I did not factor that into my calcs. I had an architect draw up the plans so I could get some competitive bids. Here are my projected costs:

*Construction: $230k
*Solar: $14k
*Architect: $15k
*City Fees (est): $10k
*School Fees: $3.5k
*Appliances: $2.6k
*Window Coverings: $2k
===================================
TOTAL UPFRONT COSTS $277.1k

*Rent, 2 units: $2700
*Property tax increase ($195)
*Water: ($96)
*Property insurance increase: ($26)
*Maintenance: ($25)
*Electricity: ($10)
===================================
MONTHLY NET $2348

PRETAX YIELD: 10.2%
BREAKEVEN: 9.8yrs

So it seems to be better yield than I can get elsewhere. My only other option is to use the cash for a downpayment on a house, but I don't feel great about breaking even or even losing money each month for the riskier long term play. I like cashflow.

Comparing to a house though, I'd guess that half of the $277k cash is gone if I tried to sell or borrow against the new value of the house. So it's gone unless you count very long term appreciation of the entire house. Whereas if I use the money for the downpayment, it's still there and stable if I wanted to sell or borrow against it.

What else am I missing? I appreciate any and all feedback!