ADU Financing for renting

[Mason Alvarado]

Has anyone in the Tucson area secured financing for an ADU rental on their primary residence? We have the land and meet the code requirements dictated by Pima county. I am looking for information regarding financing the construction on an ADU. I am open to getting a manufactured home and dropping it if necessary. I have an FHA on my residence. Haven't refinanced or pulled a HELOC. Not sure if there are other long term finance options (30 years preferably). Budget is $80k-100k for a 2br/1ba.

[Patrick Allen]

I think, generally speaking, this is one of the bigger reasons NOT to build an ADU in your backyard simply because you have the space: there aren't really any simple ways to finance the building costs.

Maybe some specialty programs exist for prefab homes or a custom ADU builder might have his own lender partner they could refer you to... but unless you yourself are an experienced home builder with a track record in ground-up construction, you're basically looking at a hard money or a HELOC. You also probably will not get a $1 in cost <= $1 in value from the ADU after construction, if you tried to do a cash-our refi or something. AND you cannot separately sell or refinance that ADU in the future.

That said, I ran across this company that seems to specialize in this type of addition: maybe they could help? https://www.prismadu.com/

[Mitchell Morgan]

Have you looked into shipping containers?

Personally, I think it's an incredibly interesting idea. The concept is to convert one or more shipping containers (the containers transported on the decks of those massive cargo ships) into a home. There are tons of examples of these container homes online plus info about the conversion process. Some contractors even specialize in converting containers into houses.

Wow I sound like a container shill. I've not built one before, I just think it's a cool idea. Check it out, maybe it could work for your property.

[Mason Alvarado]

Quote from @Patrick Allen:

I think, generally speaking, this is one of the bigger reasons NOT to build an ADU in your backyard simply because you have the space: there aren't really any simple ways to finance the building costs.

Maybe some specialty programs exist for prefab homes or a custom ADU builder might have his own lender partner they could refer you to... but unless you yourself are an experienced home builder with a track record in ground-up construction, you're basically looking at a hard money or a HELOC. You also probably will not get a $1 in cost <= $1 in value from the ADU after construction, if you tried to do a cash-our refi or something. AND you cannot separately sell or refinance that ADU in the future.

That said, I ran across this company that seems to specialize in this type of addition: maybe they could help? https://www.prismadu.com/

That was very helpful. Thanks! I may go with a private/portfolio lender. I do have plenty of family who are willing to let me owe them money