Great responses @Brad S. and @Becca F.. If there was ADU specific financing, that might be attractive (none that I'm aware of?). Perhaps a lot split with SB9 could work as well. My thought is this; let's say I do exactly what you're proposing. I have 1 or 2 units on my lot now both being rented, little bit of cash flow (consider how expensive R&M is here in Bay Area, 1964 build). It's a poor CoC deal and you're hoping for appreciation in the 2-5 year window. We can save a little each month to buy something in the midwest but it's at a snails pace.
We would rent in the same area, around ~$5k. That's the minimum going rate for families. The plan is to take $400-500K and purchase R-2 lots to build 5-10 units. Projected CoC is 30-50% pending how you structure the debt, reno costs, etc. This would be in CA.
You could do this one or two at a time out of state, utilizing HELOC but aggregate cash flow for certain cheaper markets, say midwest, is so small, the scale just doesn't make sense to me. We're talking $6-8K net in CA.
While I can agree with everyone that keeping a prized bay area property has grandeur, the opportunity costs, to me, appear very high.
