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Updated about 2 months ago on . Most recent reply

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Marisela Arechiga
1
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6
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To ADU or to Purchase Another?

Posted

Hello BP community! 

New investor here and excited to engage with the community. This year I purchased my first Investment Property in Kern County and its currently being rented. I have some additional capital put away to convert the garage into an ADU to create a Mid-Term Rental but was wondering if it would be a better ROI to use that capital to purchase another investment property? To convert garage into ADU or purchase additional? What would you do?

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977
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Gregory Schwartz
  • Rental Property Investor
  • College Station, TX
1,002
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Gregory Schwartz
  • Rental Property Investor
  • College Station, TX
Replied

How do you plan to finance the ADU? Have you analyzed whether it will genuinely add value? From my experience, when I dive into the costs associated with building an ADU—including construction expenses and financing options like hard money loans—it often doesn't make financial sense. The combination of high costs and the after-repair value (ARV) frequently leads me to conclude that buying a new rental property is a better use of capital.

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Schwartz Realty Group
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