BRRRR Deal with New Construction Detached ADU construction

[Aneesh Nainani]

Investment Info:

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

Purchase price: $735,000
Cash invested: $290,000 (245,000 for the 1000 sq. ft ADU, 45,000 for rehab of the main dwelling unit)

1000 sq. ft detached ADU in Livermore - Both MDU and ADU are rentals

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

Sideyard for RV which turns out is ideal for side by side ADU

CA ADU Laws implemented in 2018

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

Pocket listing through agent

How did you finance this deal?

Conventional Mortgage with 20% down

How did you add value to the deal?

Added a 1000 sq. ft detached ADU

What was the outcome?

Both units are now rented. Was able to refinance. ~3000$/month net cash flow with ~12% cash on cash return

Lessons learned? Challenges?

In retrospective i would have added more living space for a 3BR/2BA ADU