Adding ADU to a duplex in California

[David Maldonado]

Hey everyone,

So my first attached 488 sq ft ADU project on my SFH went great. Spent 35k (before 2020 when permit fees were decreased) and it added 60k of equity on my property. I am planning on buying an owner occupied duplex to brrrr in a relatively high market and was thinking about adding an ADU. Since multifamilys are valued based on income, would a duplex with an attached ADU be appraised like a triplex? The cost would be about 50k for a 2bed 1 bath 749 sq feet in a market where it will easily rent for $1800 per month. I am also aware that I can add a 2nd ADU on a multifamily, but it will cause lending issues when it comes to refinancing or selling. Im a buy and hold guy, so cash flow is my priority, but I would like to refinance and pull out all the cash invested in the ADU(s) and repeat with another owner occupied loan after the 1 year occupancy. For anyone about to say that 50k is a unrealistic number, I am an owner builder, do most of the work myself and only hire out a few parts for the labor.

[David Maldonado]

Originally posted by @Brian Larson:

@David Maldonado - $50K still seems really low but I am glad to hear it is a working strategy for you.

Thanks Brian,

I am creating a spreadsheet with all the costs associated with the ADU from what materials were used, quanity, and cost, labor, permit costs etc.

I believe this is a game changer, but it all depends on how much equity the adu will add so I can pull it out for the next unit.