Due to item 1, adding an ADU can require years to start achieving any return (once the accumulated cash flow recovers the initial negative position).4) Adding an ADU is a slow process.

@Jaycee Greene the estimated value of our SFH is $370,000-$400,0000.

With out that, there is no proof that it will perform.Do you have a full estimate and plan for 3 years on the property?

The vast majority of wealth accumulation is through appreciation, cash flow after rents increase, and amortization. 

@Jason Dubon I take the cost of all appliances and divide it by 5 (avg lifetime of appliances these days) to estimate annual cost of appliance replacements.

These methods include: Detailed Engineering Cost ApproachDetailed Engineering Cost Estimate ApproachSurvey or Letter ApproachResidual Estimation ApproachSampling or Modeling ApproachExperience or “Rule of Thumb” ApproachIt’s important to understand the differences between the approaches including which one best fits your property and the reliability of each approach.DETAILED ENGINEERING COST APPROACHThis approach compiles the costs from construction and accounting reports to build a report.

Seller is the Agent.Seller bought property in January of 2023 for $730,000Current “As Is” Value : $770,000Target Acquisition Price: $730,000-$780,000 After Repaired Value: $900,000Repair Estimate: $120,000Initial Offer Amount: $715,000Loan Program: Bank Statement Program.Total Estimated Monthly Payments (Principal, Interest, Taxes, and Insurance) $5500/month (based on $770k purchase price)Estimated Gross Yearly Income from Short Term Rental: $160,000 (65% Occupancy, $700 a night| (STR Listing Comparable properties Listing 1 Listing 2 Listing 3)Net Monthly Income after management and taxes: $11,751.25Net Monthly Income after Mortgage Payments: $6251.25 ($75,015) Per YearTotal Cash Investment: $297,000 ($177,000 in down payment and closing costs and $120,000 in repairs)Average Yearly Return on Investment: 25% yearlyAverage increase in property value per year: 5%Average increase in booking revenue per year 7.5%Property Value average after 10 years: $1.5 millionTotal Cash received over 10 years: $1.3 million.Total Equity multiple min over 10 years: 6x total return on $297,000 invested.

When I'm figuring out how to price an Airbnb I always cross-reference AirDNA or PriceLabs to get an estimate on what the income would be.

See if they will give you an estimate of the assessment for the property.

We estimate the project will take less than 3 months to complete.I’m exploring alternative short-term financing solutions and would appreciate any advice or recommendations on options that might work well for this type of project.Thank you in advance for your insights and assistance!