How to find comps for properties w/ADU

Question

Hello!

I'm looking to house hack by converting a detached garage to an ADU. My town may be opening up permits for this soon, so I'm trying to prepare for the best case scenario where ordinances change to allow ADUs in the near future. My strategy is to short term rent the ADU.

I'm trying to understand the value of the property after adding the ADU so I can start shopping around for financing. What sites or approaches can I use, given my town has not permitted construction of ADUs historically, but there may be some non-permitted ones out there?

Nicholas Williams · Answer

@Dominic Rosato thank you for the suggestion.  It is exciting for sure!

Preston Dean · Answer

Hey Nicholas,

Typically a realtor will be able to help run comps for you with a back ADU. At least in Texas, and the MLS I have access to I can do that.

The only down side is that appraisers most likely will not consider the ADU into the property value if the main house/lot is zoned as a SF vs MULTI.

We ran into this issue here in Fort Worth & my client purchased a property with a back ADU but the appraiser would not count the ADU as part of the property value. He gave it the same value as a back shed.

Reason being is because the lot was zoned for single family use and having the back ADU made it a multi family use.

So be aware of that!

Jared Czaia · Answer

Redfin actually has a "guest house" data field and you can see all sales within the past five years.

i am in the market for a property with an adu in the next 2-24 months so this is the most helpful way I've found to understand the market for those properties.

Jake Andronico · Answer

@Nicholas Williams

You can use Zillow to search keywords like "ADU", "in-law", etc. and search in the area that you are looking for for sold comps.

It will search keywords in the description of the sold comps and will at least give you a more targeted approach :)

Best of luck to you!!

Dominic Rosato · Answer

Just saw the same news as you, Nicholas. This can be a game-changer for Jersey City- Allowing ADU's opens up a whole new (legal) investing strategy for the house hackers like us.

As for finding comps- That will be tough (but not impossible) around here considering the only ADU's currently are of the illegal kind. However, like what @Preston Dean said, local realtors can run searches for this in the MLS. Although sometimes it takes some creativity, such as searching for keywords like "private apartment", "mother-in-laws suite", or "finished basement".

This is exciting stuff, I plan to follow this news closely!

How to find comps for properties w/ADU

Most Popular Reply