Single Family Home with accessory Dwelling Unit Build Out

[John Prucha]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $350,000
Cash invested: $70,000

SFH with tons of deferred updates and zoned for an additional dwelling unit (ADU). The goal at purchase was to house hack and convert the detached four car garage into a 2/1 ADU.

Once done the project should comp out >500K and the ADU should rent for between 1500 and 1700 which will cover the bulk of my mortgage. Let me know if you have any questions.

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

I was having trouble finding a multifamily that would meet the 1% rule.

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

Studied city zoning.

How did you finance this deal?

Conventional loan followed by construction loan and will cash out refinance at the end

How did you add value to the deal?

Built and ADU

Lessons learned? Challenges?

Political winds change and can make life hard. Stick with multi-family that is already built.

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

Collegiate Peaks Bank for the construction loan

[Brian Larson]

@John Prucha - I hope this project continues to work out for you.

I have personally experienced similar issues with an ADU project here in San Jose, California. Despite the fact that San Jose it super friendly to ADUs, it took over 7 months of back and forth before the city finally approved my ADU permit.  I was beyond frustrated but the project has finally started.  Once it is complete in January 2021, it will cover over 50% of my mortgage.