Seeking Advice: ADU in Berkeley vs. Property in the Midwest

[Adam Sha]

I'm facing a bit of a dilemma and could use some advice from this knowledgeable community. I'm considering two investment options and am torn between them:

1. Building an ADU in Berkeley: I have the opportunity to build a 316 sqft ADU in Berkeley, CA, which I could rent out for around $2,000 a month. The construction cost is estimated to be around $180,000.
2. Buying a Property in the Midwest: Alternatively, I could take the $180,000 and buy a property (or properties) in the Midwest, where the rental market is more affordable. The monthly rent would likely be lower, but the entry costs and potential regulatory hurdles might also be less.

Here are my main considerations:

• Rental Income: Higher in Berkeley ($2k/month) vs. potentially lower in the Midwest.
• Appreciation: Likely higher in Berkeley.
• Management: Easier to manage the ADU since it's close to home, but more regulatory headaches.
• Diversification and Simplicity: Potentially less hassle with a property in the Midwest.

Given these factors, what would you recommend? Has anyone had experience with either option and can share insights on rental yields, appreciation, management challenges, or any other considerations I might be missing? Thanks in advance for your thoughts!

[Mike Paolucci]

Quote from @Adam Sha:

I'm facing a bit of a dilemma and could use some advice from this knowledgeable community. I'm considering two investment options and am torn between them:

Don't forget to take future legislation into account. This is what I'm referring to --> "Justice for Renters Act" This is coming up on this year's November ballot for the entire state. 

As a bay area native (born an raised in SF), I personally prefer to stay away from legislation that will handcuff me as a landlord moving into the future, which is why I started investing in the Midwest back in 2021. Columbus, OH is landlord friendly and the term "landlord rights" is a real thing. 

Happy to answer any questions you might have about OOS investing or Ohio Markets.