Purchase price: $310,000 Cash invested: $150,000 Sale price: $500,000 We acquired an off market 880 SF hoarders drug house built in 1926 with an unfinished basement and did a $150K renovation where we replaced EVERYTHING in addition to adding 750 SF by finishing the basement.

Purchase price: $310,000 Cash invested: $150,000 Sale price: $500,000 We acquired an off market 880 SF hoarders drug house built in 1926 with an unfinished basement and did a $150K renovation where we replaced EVERYTHING in addition to adding 750 SF by finishing the basement.

Purchase price: $310,000 Cash invested: $150,000 Sale price: $500,000 We acquired an off market 880 SF hoarders drug house built in 1926 with an unfinished basement and did a $150K renovation where we replaced EVERYTHING in addition to adding 750 SF by finishing the basement.

I've dealt with pimps, prostitutes, drug overdoses, venomous pet snakes, theft of service, dead bodies, break ins, walking in on an intruder, etc. 

If you are relying on an appraisal, be sure there are comps that justify your valuation (which would be prudent even for non ADU property but investors seem to be ignoring this step when it comes to adding ADUs).Good luck

Like Jaron said, there could be equity advantages to your improvements if done correctly but if you plan on living in the unit for a while, don't spend a dime unless you have to.  Adding

I'm on the east coast, you'll want to verify that either approach to adding insulation is conducive to your climate and the design of the building.

This is due to added risk of both prepayment and non-payment. 

to ad d a little color to the conversation I first started in the HML space in the mid 80s in SF bay Area as a CA RE broker.My dad had used HML or private money since the late 60s in Northern CA.in those days 70s and 80s most hard money or a lot of it was 80 10 10 on owner occ.. because you could not get more than 80% loan to buy a home ..

The adjustments we are seeing in San Diego places the value of the property after adding the ADU at less than the value of the property prior to adding the ADU  plus the hands off ADU costs.value (SFR + ADU) < (value(SFR) + HandsOfCostOfAdding(ADU))A protégé of mine recently had an offer for his property that had a nice ADU addition.