Adding Accessory Dwelling Unit

[Jack Murray]

I am about done rehabbing a house I bought a while back.  The market here is pretty hot right now.

I started looking at doing another flip after I sell this one, and there are no lots for sale or many fixers either,

so what I have been thinking about is building a second unit in the backyard of this house.  It has a huge backyard,

and I can build another 900 sq ft 2 bedroom unit which I think will add $100k to the value of the property for a total of $300k.

But there are no comparables, and my realtor could only give me duplexes which were only about $250k.

My question is should I build this second unit rather than look for another "very hard to find now" flip?

If I go ahead and do it, I will need to borrow hard money to build it as my cash it all tied up in the existing rehab.

[David Song]

Add 900 sf for an increased value of 100 k?

Where is the property?

We are applying for an ADU in San Mateo, ca. 640 sf 1 bed 1 ba.

Just the permit will cost about 10 k, with all the green building, demo recycling, all kinds of bureaucracies.

However, the added value is around $800/sf, or $400k ish.

The actual building cost we estimate around 100k-130k.