All Forum Posts by: Morgan Roddy

Hey Chad!

As Robin mentioned, it will be difficult to find a lender that will accomodate 80% LTV for a cash out. You would be looking at 75-70% LTV with shorter seasoning periods.

RTR

So you're in at $350k let's say.... Have you done the math? Does this give you the return you want? Let's say the ADU rents for $1500 a month (?).....that's 233 months to break even. Not incl interest. I know I'm over-simplifying this but it is a concept worth exploring....

Morgan,

What we call it is a Renovation loan similar to construction but that is saved for "Ground Up" builds. Simple renovation loan would allow for you to convert a garage into a bedroom and allow to build up or build an ADU.

It might make sense to look into simply buying an ADU from the vendor already built as a prefab/modular. That way they simply trailer the ADU you out and adhere it to a foundation/ground. There are some new companies out there called "Tiny home" you can pretty much call them and they deliver the home to your property and do whatever install is needed.

This can save you a large amount of cash based on new construction and also reduce the timeframe from start to finish. You quoted above $250-300K that just seems like an overpriced bid to me but for what's it's worth check out the "Tiny Home" or ADU options where they trailer the unit out and complete/install. Either way you can use a Renovation loan for either of these options and they are generally easy to qualify for especially if it's a Primary or Secondary home.

Last time I checked you can buy a an ADU aka tiny home in CO for starting at $39K upwards of $75K for a 3bed/1 bath. Try typing Colorado tiny home companies there are more than a few just vet them and compare prices. Nothing wrong with an ADU/tiny home not attached to the home. If anything it might offer more privacy and less noise for all parties.