Hello all LA residents! I get in touch with a lot of CA investors who look elsewhere for cashflow and solid returns because they cannot maximize their profits in their area (CA/LA/SD). 

Currently LA county is highly promoting ADU's and it can actually be a better investment than trying to search out of state.

Prospective investors reach out to me looking to spend around 150-200k on a deal in the Philadelphia area to get cash flow. What they fail to realize is that the deals they will find in this price range are often in Class D areas, section 8 rentals, and lack any solid appreciation. Not only do they have to manage this type of building out of state in hopes of higher cash on cash return, but they put themselves in a risky investment on the other side of the country. 

Renting out a building for 1500-1800/m that costs around 150-200k with some rehab seems like a decent investment for a CA resident, but I can assure you, that after management, expenses, maintenance, evictions, repairs, and other risks that come with class D investment - you are not walking away with much - in fact you are likely buying a headache. 

In LA county ADU's can rent anywhere from 1600-2400/m depending on the size of the building and particular area (typically 1 bed style). My partner and I build these ADUs at an effective cost (under 200k - including labor and materials - 450 sqft or so) and with a timeline around 3 months or so.

Wouldn't it be better to invest in an ADU for under 200k and get anywhere from 1600-2400/m in rent in your own backyard than trying to invest in Section 8 rentals out of state and do a rehab for them?

If you're able to build on your lot it the returns far outweigh out of state investing. You can hit the 1% rule investing in CA... 

This strategy is also perfect for someone looking for a househack to offset their mortgage in high priced CA

Reach out if interested in receiving a quote or learning more