Has anyone BRRRR'd an extra unit on their property?

4 Replies

I'm closing on a 3 unit property in a couple weeks. The attic of the property is massive and easily large enough for a 4th unit.

My idea is this: At some point in the near future I'd like to add that 4th unit. My brother has around 30k to invest and he wants to help me out. If I can get this 4th unit built for somewhere between 20-30k (which I believe I can), I'd like to get a tenant in there for 800-1000 a month, then get a HELOC and use that money to pay my brother back in part or in full. (Timeline is to have the unit done and tenant in by the 6 month mark).

The problem is that I'm not exactly sure how much the property will appraise for post reno and or if I can even get a HELOC on the property right after purchasing.

Has anyone had any experience with anything like this?

If you are going to keep the place for a long time it will be worthwhile because of the rental income. However if you are holding short term it may not be worth it. In my experience with a accessory dwelling unit (ADU) the appraiser only gave me a $15000 "contributory value." That was based on a home valued at $265000. I was able to get a HELOC but I had paid cash for the place. I ended up not using the HELOC because I rehabbed the ADU out of pocket. My situation was a single family home with the addition of the ADU yours is already multi family so values may vary.

If you are going to keep the place for a long time it will be worthwhile because of the rental income. However if you are holding short term it may not be worth it. In my experience with a accessory dwelling unit (ADU) the appraiser only gave me a $15000 "contributory value." That was based on a home valued at $265000. I was able to get a HELOC but I had paid cash for the place. I ended up not using the HELOC because I rehabbed the ADU out of pocket. My situation was a single family home with the addition of the ADU yours is already multi family so values may vary.

Talk to planning to see if it is zoned for it. If it is, get your contractor in there to give you a bid. Than you can run your numbers to see if it cash flows well enough for you.