Garage Conversion and Rental

[Keith Miller]

Investment Info:

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

Purchase price: $326,000
Cash invested: $100,000

Converted the detached 2 car garage into an ADU, doing most of the work myself. Soon afterwards, we moved to our next house, and am currently renting the main house. We were running the ADU as a Airbnb and making great money cashflow. The whole property currently cash flows an average of over $1,000 per month. We put 20% down on the house, and paid for the ADU improvements in cash, so we used to have have a lot of equity tied up.

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

The ability to convert the garage into an ADU was the main thing that attracted me.

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

MLS.

How did you finance this deal?

20% down conventional mortgage. Since the ADU was completed, I got a $70K HELOC on the property, and am going to use that money for the down payment on the backyard duplex I'll be starting soon.

How did you add value to the deal?

I converted the garage into an ADU. In addition, I framed, drywalled, painted, and added in a egress window for an additional bedroom downstairs to turn it from a 3-2 into a 4-2. Since then, we've taken out the wall between the kitchen and living room, added in a fence in the backyard, landscaping the whole yard, and are in the middle of tiling the bathroom.

What was the outcome?

We have gotten $1900 for the main house when it was a rental, and the ADU is doing super well on Airbnb, we just got a booking for the month of August for $2950.

Lessons learned? Challenges?

It can be tough to get water to the garage if the water line is on the other side of the house.

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

My agent was Gina McDonald and I'd highly recommend her.