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

We pride ourselves in keeping the forums positive, helpful, and focused on real estate (please, no politics, religion, etc.).

If you're already in a secure financial position, leveraging your equity could be a smart strategy.

Monthly cash flow is positive. 

This initial negative equity position consumes the initial cash flow.  2) the addition of the adu makes the property multi family and likely makes rent control apply.  

I recently did one where the lender did allow it but that was because of our position as a great customer of the bank and our impeccable credit record.  

Folks this is meant as a beneficial post and not about good or bad positions.  

I was the HML who put the CA clients into title for 1k per house.. then countrywide or wells would refi them in about 90 to 120 days generally they could cover their lending costs and be positive cash flow 50 to 150 a month..

Learn from this so it never is repeated.On the positive, with the value add you likely will do alright flipping it.Good luck

I position my inspections as 'planning for future repairs/improvements' which mitigates that whole 'he's here to get my security deposit' mindset.And, I would rather have the tenant with me than to have him later claim that something was broken during the inspection.