That'll negate the supply.

I realize you are an expert on 1031 but perhaps "interest tracing" concept is less common...

Both scenarios are great so you can't wrong unless you start negative cash-flowing on a property.

There is a reason experienced flippers are not doing ground up ADUs in CAIn general, ADUs cost more to add than the value added creating an initial negative position and typically cause the primary structure to now be rent controlled (even though I believe that is not applying the law as intended).  

Hey Tyler, speaking as someone who invests heavily in Detroit and helps others do the same... it is far from saturated.The sentiment around Detroit has finally moved from grossly negative to neutral.

I also dont want to take out a HELOC because of it eating up my cash flow and end up being net negative.

I also dont want to take out a HELOC because of it eating up my cash flow and end up being net negative.

You will probably be a little negative on cash flow unless you rent by the room or buy the interest rate down or both, but honestly a little negative on cash flow isn't a big deal if you still have most of your cash in the bank since you only put 5% down. 

Just the concept and idea aren't enough to bring to the table.

That is a concept everyone can and should get behind.