Bought an SFR that needed a cosmetic rehab and had an unfinished basement. Updated the main house and then built a 2bd/1ba ADU in the basement. My husband and I live in the ADU and rent out the house. Currently the rent from the tenants covers all our expensed. Once we move out, we will be cash flowing roughly $2500/mo.

What made you interested in investing in this type of deal?

We wanted a house hack where we could live comfortably and relatively mortgage free for a few years, so we could save more to invest. It also bought us the freedom to travel without having much in the way of living expenses and opened up the possibility for us to cashflow while not in town.

How did you find this deal and how did you negotiate it?

We found the deal on market and shared it with our agent. We under contract right before thanksgiving, which I think helped give us the upper hand in negotiations. The seller wanted to get it under contract before the holidays.

How did you finance this deal?

We financed the deal using cash we had from the sale of my husbands condo. He's purchased a condo in 20214 and by 2020 it had roughly $200k in equity.

How did you add value to the deal?

We renovated the upstairs with included: new kitchen countertops and backsplash, adding a half bath and laundry room to the main floor, refinishing the hardwood floors, painting everything, refreshing the main and master bathrooms (paint, new fixtures, regrouting tub/shower surrounds). We finished the unfinished basement which added an addition bedroom and bathroom to the overall bed and bath count of the house.

What was the outcome?

By renovating the main house and building an ADU we were able to force roughly $300k in equity.

Lessons learned? Challenges?

Lessons learned - Get multiple bids for the project and be ready to negotiate with contractors. Look over bids with a fine tooth comb, no bid is the same. Communication is key, be very clear about what your scope of work, budget and timeline is for project. A contractor will tell you anything is possible but that usually comes at additional cost and time.
Challenges - We had some hiccups in the beginning of the project that got our project held up in permitting and added 2mo to our project.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We found our agent Michael Haas via Bigger Pockets and he was a huge help! I'd like working with him so much, I got my license after this project and joined his team : )