Additional Dwelling Unit

[Sarah Schopbach]

Hello BP's,

We live in Asheville, NC and I wanted to see if there is anyone on here who has done recent ADUs on their property.  Did you decide to do a prefab or get a contractor?  What was the cost?  Has it been worth it?

Are you doing STR, MTR or LTR with it?

Thank you!

[Mitch Davidson]

@Sarah Schopbach, I have an ADU here in Asheville, and have considered adding another to my land. I could try to use a Fannie Homestyle loan to do it, but the appraisal would kill the deal. Meaning, you'd laugh at the appraisals I've had of the property. Each time the appraiser gives the same $/SF amount that they give for my walkout basement, thus valuing the place at $45K or so when it'd take me $175K to build it afresh. I didn't build it myself. And the seller was sorely disappointed with the appraisal and largely-reduced sale price, as they thought the place would be valued more highly. That being said, I could argue that my place is a 2 unit, as there is some gray area there, but in my case I'd have to subdivide to convince the appraiser.

So my conclusion is this. The renovation loan would fail because it requires the appraiser to confirm that the work will add at least $1 of value for every $1 spent on the renovation. 

While the ADU might generate cash, you'll likely be disappointed regarding equity and earning back all that you spent. So if it were me, I'd bring in a modular tiny house and fix it to a permanent foundation. Instead of $150K or so to stick build, a prefab cabin (including site prep, foundation, hookups, etc.) might cost you $80K total. And for sake of future appraisals, it'll carry the same value as a stick built approach will.