If it’s at or near 70% we dig into the full cost model that accounts for financing costs (hard money and GAP), acquisition costs, holding costs and selling costs.

Remember, you may be tied up in several houses with little cash, so it is important to think of all possible situations.Who is doing the accounting? 

This is also accounting for my increase in insurance costs due to adding insurance to the ADU. 

We have retirement accounts, a small private stock market account, and an emergency fund. 

In 2021 we bought the building for $1.5M using private lenders, pushed the occupancy from 50% to 80% occupancy and it appraised for $3.125M, allowing us to pay back the private mortgage.Right now, we are in the predevelopment process of design and piecing together the capital stack for the redevelopment deal, which will be made up of historic tax credit equity, RestoreNY Grant, DRI Grant, etc.

What has the appreciation been historically? 

Start small and aim for properties that cash flow well, even after accounting for taxes, insurance, and repairs.Most importantly, keep taking action!

Hi, Jaycee The deal makes sense for me after accounting for all expenses including vacancy, cap ex, and repairs.

I recommend finding a real estate and business accountant to help you with filing your taxes.Bigger Pockets is a great place to find a real estate tax accountant. 

Don't forget about your property taxes going up to account for that ADU.