It's hard not to be emotional when house hacking becasue you're living there but think about other factors for you too, not just the cost.

Their contribution depends on factors like local demand for ADUs, their design and size, and how they’re used (e.g., rental income potential).

As a family-run business we’re curious—what factors do lenders prioritize most when evaluating projects like ours?

@Michael BertschAs a general rule, we only leave a fireplace functional unless it has a sealed, externally vented, gas insert ... and, even then we may disconnect it.Check with your insurance provider and see how unhappy a functional fireplace in a rental makes them.

When under contract at 300k with the expectation that codes would be the determining factor on what can be done on with the property, as it relates to new construction.

@Robert Quiroz I think all of the factors you have listed might contribute.So I’m not going to comment on that but I am going to comment on an assumption you made.If 85% of rents are below market on deals you underwrite then those contract rents are probably THE market rent.You can’t just go based upon area median income to rent ratio.First off urban areas are oftentimes street by street, block by block.

Treat this property as a business and factor in all the associated expenses, including mortgage payments (if you pull a loan), maintenance, and potential vacancy periods.To simplify management and make this less of a hands-on job, I’d strongly recommend working with a property management company.

When under contract at 300k with the expectation that codes would be the determining factor on what can be done on with the property, as it relates to new construction.

Quality pics are by far the number one contributing factor.

Also factor in if the rents jumped a lot and if that would lead to a vacancy, which will cost you more in the short term.