I like the cash flow and see the potential for increasing rents, but I’m hesitant about overpaying.

Accessory Dwelling Units (ADUs) are an increasingly popular way to generate additional rental income on an existing property.

I like the cash flow and see the potential for increasing rents, but I’m hesitant about overpaying.

I think it's about the best time there is to outside of the past to invest and acquire properties.I just recently found an article by Julie Taylor from realtor.com that was posted December 10th that has some predictions on housing markets where "Home Sales Are Set to Soar" with Colorado Springs listed as number 1 with expected YoY sales increase of 27.1% and Denver expected to increase 13.6% YoY quoting Christine Dupont-Patz who is a real estate agent in the Denver area. 

Seller is the Agent.Seller bought property in January of 2023 for $730,000Current “As Is” Value : $770,000Target Acquisition Price: $730,000-$780,000 After Repaired Value: $900,000Repair Estimate: $120,000Initial Offer Amount: $715,000Loan Program: Bank Statement Program.Total Estimated Monthly Payments (Principal, Interest, Taxes, and Insurance) $5500/month (based on $770k purchase price)Estimated Gross Yearly Income from Short Term Rental: $160,000 (65% Occupancy, $700 a night| (STR Listing Comparable properties Listing 1 Listing 2 Listing 3)Net Monthly Income after management and taxes: $11,751.25Net Monthly Income after Mortgage Payments: $6251.25 ($75,015) Per YearTotal Cash Investment: $297,000 ($177,000 in down payment and closing costs and $120,000 in repairs)Average Yearly Return on Investment: 25% yearlyAverage increase in property value per year: 5%Average increase in booking revenue per year 7.5%Property Value average after 10 years: $1.5 millionTotal Cash received over 10 years: $1.3 million.Total Equity multiple min over 10 years: 6x total return on $297,000 invested.

So if prop 33 passes it will be possible to cap rent increases from one tenant to the next.A recipe for blight.  

In Portland for example we are not allowed to increase rent more than once in 12 months, and it must be less than 10% increase in "effective rent".

Who cares about lifetime interest costs, except to the extent you can easily lower them (refinance to a lower interest rate) to increase your cashflow.

I'm not sure by how much your rates are increasing but I have friends in NOLA who have seen a 2x increase per year.

Over time, rents may increase, improving your cash flow, and you’ll gain equity and valuable experience managing tenants and property operations.