Los Angeles ADU/Duplex Appraisal Issues

[Fahad Masud]

I'm looking into buying a single family residence and building a second unit as a duplex or ADU, but my lender and other posts online say that is very difficult to get a correct appraisal done for a 2 unit home. In some cases, the ADU isn't considered at all in the ARV for a property.

does anyone have any tips on how to get the appraisal to come in correctly ? This is the only thing preventing me from moving forward with this duplex/ADU plan

[Nabil Suleiman]

@Fahad Masud

The interesting concept with ADU should not necessarily be used to refinance cash out, but to increase potential cash flow. ADU's are great for the latter but not great for the first concept. If you want to utilize a BRRR strategy, then you need a small, cruddy SFH on a large lot hopefully in an up and coming or quickly appreciating neighborhood with a detached garage... take that home, add square footage to the front house so your comps are now in the maybe a 3/2 or 3/3 arena. Convert the garage into the ADU and now you have a recipe for an nice forced appreciation in comparison to other SFH in the neighborhood and the ADU can be used as a cherry on top for whatever the appraiser decides to add. If you are using large lenders like Wells, B of A etc etc, you should factor in 0 value for the appraisal because they are the worst, but if you have a private broker and they understand the area, and understand the appraisers standards in how to value ADU's (yes they exist) then you can have some value considered for it, but again.. don't rely on it, because a lot of appraisers dont put in the extra work to educate themselves on the ongoing ambiguity in our quickly changing market.

Anyways... Just my two cents.