Seems like it's in a lower end area so if it is filled you will have tenant issues and turnover cost.

Typlcally, a lender is going to lend 75% - 90% of the Cost of the project (property price plus rehab cost (scope of work)) or 70% - 75% of the ARV (As Repaired (as completed) Value).

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

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

The real prohibitive costs come from the legal, compliance, and reporting requirements of registering a security.

If the credit screening costs $25, then you earn nothing.I believe there are exceptions for a higher fee, but you have to stick to the actual cost of the screening.I would talk to an attorney before charging more than $25 per applicant.

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.

We agreed, and then they informed us after the fact that the cost end up being $2,000.00 because it was "so dirty." 

Multiple people including myself have tried to caution him of the the true costs but he's been repeatedly dismissive and has made it clear we give him motivation and he wants to prove us all wrong (whatever that means). 

.: Cost of risk scenario.