Sharing my ADU BBRRR Investment results
Finding a profitable rental property in So Cal can be hard these days. With prices rising and people bidding 20-50k over asking, one could never cover their mortgage and expenses with a single rental property. Luckily in California we have the option to build an ADU (accessory dwelling unit). Since the state mandated the ADU laws in 2020 and made them way more flexible and feasible for investors, I've been on a mission to successfully complete a BBRRR by building an ADU. Buy, Build an ADU, Rent all units, Refi, Repeat. I bought an investment house last year from the MLS and I just finished my cash out refinance today. Here are my numbers…
Purchased: $600,000
Home type: SFH, 3b2b with detached garage and already rehabbed by a flipper
Built an ADU and JADU: $165,000 (740 sf ADU and 400sf JADU)
All in=$765,000
ARV=$908,000
CO refi @80% LTV= $720,000
$$ Left in the investment= $45,000
Rents:
Front unit=$2500
ADU=$2000
JADU=$1400
Total=$5900
Expenses:
mortgage =$3650 MIPI
Vacancy (5%)=$295
Maintenance (3%)=$177
Cap Ex (2%)=$118
Total expenses=$4190
Cash Flow=$1710/mo
NOI=$20,520
COC ROI= 45%
Approx numbers but you get the picture. Unfortunately I couldn’t pull out all my investment but having a 45% ROI that’s CAsh flowing $1710/mo is not too bad.
For those of you thinking about buying an investment property in so cal, building an ADU is the way to go!