We Stopped Thinking About ADUs and Started Thinking About Demand

[Georgii Grigoriants]

One lesson I’ve learned over the years is that more square footage doesn’t automatically mean more profit.

A lot of investors see a large backyard and immediately think:

“Let’s build an ADU.”

Sometimes that’s absolutely the right move.

Sometimes it isn’t.

I’ve seen investors spend hundreds of thousands of dollars building additional structures that looked great on paper but produced disappointing returns relative to the capital invested.

At the same time, I’ve seen properties with very little unused land generate significantly stronger cash flow simply because the existing structure was configured around actual demand.

One example was a large house near Fort Lauderdale.

Most investors would have viewed it as a standard single-family rental.

Instead, it was configured to serve people looking for flexible housing. Some rooms had private bathrooms and kitchenette setups, others shared common areas. Weekly pricing ranged from roughly $400-$450 for the private units, while actual stays often extended beyond two months.

The result wasn’t driven by extra land.

It was driven by matching the property to the demand.

That’s why I try to evaluate properties by asking:

“What is the highest and best use of this asset?”

Not:

“How much more can I build?”

In some markets, an ADU is the answer.

In others, a teardown and redevelopment may be the answer.

In others, the highest return may come from reconfiguring the existing structure without adding a single square foot.

The investor who wins isn’t necessarily the one who builds the most.

It’s usually the one who understands demand well enough to allocate capital where it creates the highest return.

Just my experience and my opinion. Not investment advice, not a recommendation, and certainly not a one-size-fits-all strategy.