All Forum Posts by: Jillian B.

@Jillian B. If you are going to refinance anytime soon to pull enough cash to build the ADU, then quitting your job will negatively affect your Debt to Income ratio. If you decide against the ADU, from a purely economic point of view, using the cash you already pulled out, then investing in a lower cost market like OKC, you could (by staying in the lower end of the spectrum) have more rentable units and thus a higher overall return. You would need to use bank debt to leverage your out of town investments to make this work though.

Absolutely true Richard and that is why I have vacillated between both. I have enough to play with in OKC which could support the future plan to build in Denver. That is likely my answer. Denver may be the long term goal and the short term goal is cash flowing properties in a more affordable market. Once again all if these questions will help me clarify my goals.

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Originally posted by @Matt M.:

What's your long term plan with the property? Will an ADU bring enough value in your neighborhood to cover the costs when it comes time to sell?

The ADU costs are atrocious from what I've seen too. I've got a project right now with an existing one. They shouldn't be that expensive...

Thanks Matt. I think that's a great couple questions. I know right now I want to keep the Denver property long term. I know my goal is to maximize earnings on a single location, and in a strong market like Denver it will likely continue upwards. Of course there are more details to get clear on.

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Originally posted by @Will Fraser:

@Jillian B. - I think you're onto a great line of questioning here! Obviously we can't predict the future with any real accuracy, so who knows what the broad market will think about ADUs 30 years from now, but in my market even though they are uncommon, they spike the value of homes anytime they are well kept. Who doesn't love the value that an alternate income stream can bring to a property?

As for the options you lined out, I think if you are going to quit your W-2 job soon and head into 1099 work, then right now is the easiest time in the next few years for getting a loan to build the ADU. If that is a high-priority project and you feel strongly that it is the play you want to make, then I'd say today is a good day to go for it.

If getting a property in our market is in the cards, you could easily accomplish that. You could even refinance it and pull all or most of the cash back out and build the ADU.

The most important question here, and the one that can guide you the best is this . . . which of the possible decisions best fits your goals and vision for real estate investing? Rental properties in OKC are great, but they are inherently NOT in Denver. So if you envision yourself building up a stable of high performing, moderately appreciating properties in a market like mine and being as "distant" from the operation as possible, then that's a useful thing to realize. If, conversely, you'd value having some of your property right there with you then you can't get much closer than an ADU.

So, while there isn't a right or wrong answer here, there is a better path for you.

I hope this helps!

Thank you Will. Certainly an OKC property w/ ADU would be a small step in the right direction. I can always come back to my Denver property because I expect to keep it long term. In fact it may help me decide if I want the Adu or not. This is great feedback.

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Originally posted by @James Carlson:

@Jillian B.

I love Barnum! Great little Denver neighborhood, close to downtown. And we love it for our young house-hacking clients because there are a fair number of homes with basement apartments or mother-in-law suites out back.

And it's funny you mention 1376 Raleigh. I showed that place to a client earlier this year. Beautiful space. It was owned by the owners of L&D Construction, which have a niche in ADU construction. (Something tells me you already know this.) I will say they do beautiful work but that I'd also be interested in what a pre-fab home out there would cost. Sounds like you really want that garage, though, too.

I think the ADU is a great option. Have you considered doing an Airbnb in there? AirDNA says a 2br unit in the Barnum area would get about $24,000 in revenue per year. I wish you luck.

James, it appears you are good at what you do. Yes to all that.

I'm convinced that the Adu would be a good investment and have a positive return sooner or later. It's getting it built for less than $275k which means potentially overseeing the build myself that causes me to hesitate. There is also a program, a forgivable loan of $25k, to build an Adu to ease the housing crisis and keep rents moderate, basically pre-fab but no garage only an Adu... Thanks for the well wishes.

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Originally posted by @Julie Hill:

@Jillian B. I own a home in that neighborhood just a few blocks down... I have always wanted to build an ADU on it and now I REALLY want to!

Right? Yeah it's pretty impressive. I'm in Barnum. Truth is my little house was built in 1906. Not big or remarkable at all. I wonder if it would make more sense to demo it and build a duplex not the Adu. Not sure about zoning. I'll need to research.

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Originally posted by @Michael P.:

Thin slicing

Well Michael it's cliche, but you miss 💯% of the shots you don't take. Think I'll take my chances. Best of luck in your endeavors.

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Originally posted by @Michael P.:

I feel like u will fail in real estate. can u keep the money in index funds?

Why do you say that Michael?

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Originally posted by @Justin Tahilramani:

@Jillian Beth Estes - wow. That is crazy!

YUP!

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Originally posted by @Justin Tahilramani:

Originally posted by @Jillian B.:

Originally posted by @Justin Tahilramani:

Originally posted by @Jillian B.:

Originally posted by @Seth Borman:

I would relook the price to build the ADU. Do you need a three car garage? Can you make a larger ADU if you make a smaller garage?

It is less about need and more about if I am going to do it, then just DO IT sort of mentality. Plus it maximizes the ADU space. In Denver one can only build an ADU that is 75% of the bottom floor, so this would maximize the rentable space.

I certainly dont want to dissuade you from building an ADU since it will generate income and likely add quite a bit of value to your home, but consider the opportunity cost. You could look at investing in a lower COLA and build a portfolio of homes with that same $275k.

I recently bought a 4 plex in NC for 189k that brings in $2600/month....

Thanks Justin. I put this info out there for feedback. That's what I'm getting.

There is plenty of information that falls in to the "I know that I don't know" and then there is the "I don't know that I don't know" category. No dissuasion here. Your points are exactly why I keep vacillating between Denver and OKC. I figure I can find a deal in OKC that can generate income for less investment and it is just a matter of time to realize either of these ideas. I appreciate the added touch of your recent purchase info. I can do this. Set the goal and go!

You definitely have the right attitude! I'm sure that whatever decision that you make - you will be successful. I am really interested in the topic of ADUs. I think they will continue to increase in popularity in states like CA, OR, CO and WA. Do you know what the return on investment is from an overall home value perspective? If your home is worth $500k in Denver and you add a $275k ADU - what do you feel the overall value of the home would rise to?

Thanks Justin. Let me give you an example check this address out 1376 Raleigh St Denver, CO 80204. It was a regular home, renovated, then ADU added, (exact one I am interested in). If you check the numbers you can see for yourself $150K now $735K, well actually $728K. To answer you directly I understand from people I have talked with that appraisal of ADUs is not streamlined yet so their value is not completely accurate at this time. So the answer is I don't know because it is still in its infancy.

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All Forum Posts by: Jillian B.

Jillian B. has started 1 posts and replied 17 times.

Post: Investing in my own home with an ADU.

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