Opiniin on ADU please advise thank you

[Christopher Adami]

Hi, i'm curious. I am selling a house on a half acre property should i put up a ADU? Will i get my money back , and what percent extra, when i finally sell...?? Is it worth the time effort and money...,?? Thank you, Chris

[Dan H.]

Originally posted by @Christopher Adami:

We plan on fixing up the property ASAP and Selling it not holding on to it at all... with that in mind, would you build the ADU or not?

Not a chance I build an ADU if I am selling in the near term. Here are some reasons:

• The hands off costs to build a new ADU is virtually always higher than the resale or appraised value of the ADU.
• There are numerous better RE investments.
  
• Even hands off ADU additions require effort.
• The financing on ADUs is either secured by an asset or typically has less than optimal terms. 
• ADU by definition takes something from the existing property whether it is only land or if it is something like a garage or existing living space.
  ADU building cost per square foot is typically higher than existing property per square foot costs. 
  

Note if you are a contractor or developer, the situation is very different.  

The best thing about ADUs is the increased cash flow (still typically not worth it because of the large negative position of the difference between the build costs and the value added).  If selling in the near term, there is no time to take advantage of the better cash flow.  

Good luck