Hey Anthony,First off you need to make sure the area you plan to add the ADU in has no zoning restrictions or CC&Rs (covenant codes and restrictions) as this can put an immediate halt to your progress.

Private Lenders and Commercial Lenders restrict the amount of their loans to 50% LTV if its a cash out from equity in another rental.

@Ryan Solomon - I’ve had lower vacancy and higher rents because the kids on campus were kicked off because of the covid restrictions for the on campus housing. (1/2 occupancy).

When you say Section 8, does that mean there is a LURA (land use restriction agreement) recorded on title? 

@Frank Hinck@Leon Lee  Simply refinancing out of conventional loans into commercial doesn’t “reset the clock”...the restriction to getting a conventional loan is having “10 mortgaged properties”, not “10 conventional loans”.  

In the states with restrictions, we'll require a greater discount. 

The HELOC is for $57k, but I had to use $30k of it to pay off a grant I used to help purchase the property (That's a whole other story, but essentially the grant had a ton of restrictions I didn't know about and after running the numbers I decided I was as way better off just paying it back) so only $27k is available right now.

Some cities have restrict codes vs others are more relaxed.

Because what we are really talking about here is a math problem that at the end should end in a positive number ($) that only YOU know to be enough for each deal you do, the model you want to follow and the type of investor you want to be or can be based on your goals.Hedge Funds buying most of the properties at auction are successful doing that because most buy to hold based on projections that a particular location will see increase on property value so in order to out bid competition they pay 10-5% or even market value for properties ...but their model works because of gains through rentals, increase on value or just waiting for the right buyer who wants to pay JUST above market value ...having 25-50 million a year gaining 10% return is not too shabby...but thats their model smaller margins on volume.Typicaly Lenders in the other hand are in here "outside their business model" they want to minimize losses or liquidate the collateral so the money can go back to the pool again as quick as possible...very few if any have a "rehab department " with contractors ready to start work on a newly property acquired at auction... it doesn't make sense because their business is lending for investors who want to see that % gain every month so the money not gaining interest is a "cost" added to the time and $ spend to rehab or wait to sell ...Someone like you will spend the time and $ to rehab in order to sell at top $ but need bigger margins and a quicker turnaround than the hedgfunds so to compete don't restrict your area.Become a pro on your investment strategy and learn your due diligence so you can repeat the process over and over.To start these numbers are paramount to know;1.

Due to work schedule and COVID restrictions I was not able to see the property in person prior to purchase.