Buying Multi Units and converting garages into ADUs

[Krystin Krebs]

Investment Info:

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

Purchase price: $895,000
Cash invested: $120,000

I bought a duplex- two separate houses on one lot and converted both garages into studio ADU's, forcing appreciation of the lot.

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

There is a housing shortage in CA and adding ADU's increases the property value, but also adds more housing.

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

This was an off-market purchase, and I worked with the flipper on selecting finishes for the houses. Then once the houses were done, I moved in, and started converting the garages.

How did you finance this deal?

Cash & Traditional Mortgage.

How did you add value to the deal?

Added two studios by converting the garages into living.

What was the outcome?

Cash flow of $3,000/mo.

Lessons learned? Challenges?

Get your financing in order before starting construction or getting permits.