If it costs $100,000 to install an ADU and it rents for $1,000 a month, then it may be worth it.

Repair costs would be $150k.

But I'd like to see Lynnette's projects to support your claim "the portfolio was a 30% increase in cost to the consumers" since in TN, NC, VA, NC PPAs are priced at avoided costs. 

Low cost housing is a huge motivator to change behavior and keep their housing voucher. 

Meaning, if you take the money only, you would have depreciation recapture from your cost basis up to the original purchase price of the building (not including the land cost because it wasn't depreciable), plus a capital gain up to the insurance proceeds.Hope this makes sense. 

The larger the purchase price the greater the spread you need between purchase price plus holding costs plus rehab cost and ARV.  40k projected profit on a 600k project is too skinny for me. 

Simply put, we start off with the As Repaired/Completed Value (ARV), then subtract from that number a reasonable profit, the rehab cost (scope of work), which we've gotten good at, a contingency reserve for any "unexpecteds", our cost of capital/carrying costs (interest and costs of the leverage used), and our costs/fees on the buy and sell sides of a flip.

A friend and I created one recently:https://drive.google.com/file/...It was meant to compare costs between different lenders, but you can use it to just see costs from one lender as well.

I’ve had to widen my search radius to smaller suburbs or target properties needing light cosmetic work to make the numbers work.Value-add opportunities: Adding amenities tenants love, like finished basements or upgraded kitchens, seems to justify rent premiums in this market.Navigating the competition:Be creative with financing: Seller financing or partnering with other investors has been helpful to secure deals when conventional offers didn’t cut it.Work with local agents and wholesalers: They often have their finger on the pulse of off-market opportunities, which is critical in a hot market.For those new to suburban Chicago investing, I’d say the key is finding the “sweet spot” neighborhoods—ones on the rise but not yet maxed out in price.

Also, you didnt mention any financing costs, was this built with cash or do you roll that into your cost of construction?