Hi KyleThe way most real estate for sale is priced these days there’s little to no cash flow after debt service with 25% down - borrowing a down payment would put the investor in a negative monthly position. 

I sure like the concept though.. and I bet its fun.

Also, focus on 2 years of job/income stability.Class D Properties:Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciationVacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions.

Also, focus on 2 years of job/income stability.Class D Properties:Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciationVacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions.

I understand the concept insofar as if I'd purchased the property, the basis would be what I'd paid it.

I'm surprised you're still hearing negative things about it considering there's been so much positive press and chatter lately.

To me that is negative cash-flow, because I include hard and soft expenses. 

The cost to build will be significantly more than the amount of “value add” of an ADU putting you in a negative equity position.

Hey everyone,I’ve been diving into Chapter 1 of The Multifamily Millionaire, Volume II: Create Generational Wealth by Investing in Large Multifamily Real Estate by Brandon Turner and Brian Murray, and I wanted to share insights on one of the most important concepts: Crystal Clear Criteria (CCC).When scaling up to larger multifamily investments, having clear and specific criteria is critical for success.

I recommend searching "arbitrage" here and reading any/all of the hundreds of general threads about negative elements of arbitrage.