Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $326,000
Cash invested: $100,000

Converted the detached 2 car garage into an ADU, doing most of the work myself. Soon afterwards, we moved to our next house, and am currently renting the main house. We were running the ADU as a Airbnb and making great money cashflow. The whole property currently cash flows an average of over $1,000 per month. We put 20% down on the house, and paid for the ADU improvements in cash, so we used to have have a lot of equity tied up. I got a $70K HELOC on the property, and am going to use that money for the down payment on the backyard duplex I'll be starting soon.

What made you interested in investing in this type of deal?

The garage offered a great way to add value to this property, as I knew I could convert it into an ADU. There was also a lot of value to add to the interior of the house.

How did you find this deal and how did you negotiate it?

MLS.

How did you finance this deal?

Conventional 20% down mortgage.

How did you add value to the deal?

Converted the garage, doing the framing, windows, insulation, painting, roofing, and a lot of other miscellaneous jobs myself. I was the GC for the project. I also framed, drywalled, and painted a new bedroom downstairs, which has a new egress window as well.

What was the outcome?

We initially rented it out for $1,900 per month, but actually moved back into it recently, because we just love it. The ADU is doing extremely well on Airbnb, people love that it's a standalone little house.

Lessons learned? Challenges?

Bringing in water from the opposite side of the property took a lot of time and cash to complete, and some of the ADU regulations were more restrictive than I anticipated, although many of those have since been relaxed.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Gina McDonald was my agent, I'd highly recommend her.