Stay and add ADU, or move and house hack?
I’m at a decision point with my current home, and I’m trying to figure out what the best decision will be to set myself up for long-term success.
I would love to hear any ideas the community might have!
The situation: I have 255k left on my 301k home, which is probably worth 360k now.
I rent the basement out for 800/month, and my house payment after that is about 1080/month.
I have two choices.
Choice A: Get a HELOC and put an ADU in the backyard for 80k, then refinance on a 30-year fixed. I can then rent out the ADU and the basement while I live here for another few years, building equity for a down payment to move. With the ADU, when I move and rent the upstairs, the property will cash flow about 500/month. The drawback: I really don't like my neighborhood, and would like very much to move.
Choice B: Sell the house and move to another neighborhood that I like more, with a basement that I can rent out. The long-term plan will be similar to my current home - to put an ADU out back as soon as I can, and rent the basement.
I know that you can’t say without knowing the exact numbers which is a better deal. My question, though, is this: To you, is the financial gain from staying and creating a cash-flowing situation out of my property worth staying in a neighborhood I don’t really like for 3ish more years? Would you sell and move, or stay and build?
Honestly, if you're not happy in the neighborhood and you've lived in your current house long enough, cash out and take that equity tax free and then go house hack somewhere where you ARE happy, preferably that already has the 2 or even 3 additional units. Adding on ADUs and this and that adds expense, time, and headaches. I hope that helps!
- JM