This negative equity position is one of many reasons that adding ADUs in a single family zone is not typically a good RE investment.OP whatever you decide to invest in, make sure you do thorough and conservative underwriting. good luck You’re right in that the level of underwriting I presented wasn’t institutional level - but for your average person just starting out, institutional grade analysis often makes the thought of investing overwhelming.

I live in FL, 2024 my first year in RE, I have a scorp private money lender/partner and other RE related businesses STR and interior design.

Not because we had failed - this was a four-year resident entering their fifth year on the property when they got into financial trouble. 

I would also recommend talking it over with a RE professional in your area to make sure the comps for profit are accurate because it could swing a lot with different profit projections. 

Currently most investors Fannie/Freddie, FHA , VA, USDA and most portfolio notes allow up to 6% in RE agent commissions.

So, the appraiser stands to collect a re-inspection fee!

Quote from @V.G Jason: I'd partner with a lawyer that can help put some contractual language on the downside of working with contractors and real estate agents.I'd also partner with a RE brokerage firm that clearly understands your goals. 

I'm more familiar with the residential side of RE, being part of many remodels and home projects, but would like to have expertise in both commercial and residential.

Our RE Agent was Andrew Villalobos and our amazing contractor was Gerardo Reyna.

I am convinced that these markets are the hidden gold mine in RE investing today.