Build an ADU (Additional Dwelling Unit)

[Chris R.]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $170,000
Cash invested: $25,000

Build a house on my property below my primary residence to rent. Build cost is around $170,000, final appraised value around $250-$270,000. All in cost per month $1200 and it will rent for $1975 per month. The home is a 1250 square foot single story residence with three bedrooms and 2 bathrooms on 1/3 acre.

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

The numbers made sense and I had the resources. Credit lines were the key here to build before the eventual refi. This was much easier than a conventional construction loan.

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

I researched and built the unit using my local contractor.

How did you finance this deal?

Traditional back and credit lines.

How did you add value to the deal?

Negotiating, a little pocket cash, I owned the land as part of my several acre estate.

What was the outcome?

I have at least $600 positive cash flow of this one unit.

Lessons learned? Challenges?

Construction cost soar so plan for at least 30% increases.

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

Has Rohr owner and builder of Platinum Homes in Pierce County Wa. and Tay Toliver branch manager with Wells Fargo bank.