And as investors we should know this, but always anticipate higher costs and longer waits.EXAMPLE Breakdown of Costs:Plan Purchase: $1,500Permitting Fees: $2,500-7,500Site Preparation (grading, utilities, foundation): $20,000–$30,000ADUs require separate utility connections for water, electricity, and sewer but you can tap into existing utilities at the primary houseIn Raleigh you CANNOT split lots fee simple, so setting up completely separate utilities would not allow you to section off the ADU as of nowYour ADU must be on a permanent foundation (no wheels, no ability to move the structure)Construction (labor and materials): $100,000–$150,000Low-grade: $150–$180/sq ft averageMid-grade: $180–$220/sq ft averageHigh-end: $220–$250/sq ft averageLandscaping/Finishing Touches: $5,000Total Estimated Cost: $125,000–$200,000You could easily spend $200k+ with super end high finishes, custom designs, complicated sitework, adding a second story or more sqft, etc.

It currently has a renewed leased tenant for a year @$1400 a month (the owner of the property rented it out to workers at an under-market rate but could easily get $1500-1700).

All you need is a 5% cash-on-cash return, which you can find in most markets. 5% of 4.6M = $230kSo it sounds like you can easily hit your goal.

If you use niche.com you can pretty easily find median home values, median incomes, an some data pretty easily.

Do you think we will easily sell this house?

Additionally, make sure you’re familiar with local property laws and any regulations that could impact your investment.I agree with @Jason Wray that you can easily find a cash flowing deal under 200k. 

You can easily calculate the price you would pay without the exemption by looking at the gross tax bill that was just run for 2024.

The rental game is funny in that you want to responsible enough to always make rent, but not successful enough to easily afford buying a house.

Its a niche market but once you are good at it it comes easily. 

However, there's nothing to be ashamed of; this is a problem that most people encounter and easily overlook, and it can even lead to stumbling, as I got lost there for a while too.