It gives you money on hand quickly, the cost being a higher interest rate and an annual fee.

I've heard from some who swung for the fences because that's how they presented projected returns that differentiated them from other investment opportunities, others were in the business of transacting and had to find deals that could work to  keep the lights on and keep the fee machine running, others struggled to raise equity and were forced into higher leverage debt to fill the capital stack along with a ton of other reasons why a sponsor may have elected to go with the riskier debt structures. 

If I am reading your numbers correctly you are saying that you are cash flowing $876 annually for a $53,000 investment plus your time, risks and unknown expenses e.g. loss due to vacancy, cleaning after a tenant destroys the property, painting, carpets, utilities when it is vacant, new water heater, furnace, air conditioner, leak in the roof, broken or leaking drain pipe, sewer, water pipe, gas leak, or replace or repair leaking faucets, broken screens, repairing locks, trash removal, city sewer use fees and a lot more. 

This provides a protection for unpermitted units that did not exist prior to sb13.The cost has many dependencies including the current quality (is the work to code), how thorough the jurisdiction will be in verifying to code, the size of the ADU (less than 750’ has lower fees than those greater than 750’), cost of your contractors, and many other things that could effect the cost.To be blunt a jurisdiction can make it costly to bring to code or make it easy.Good luck

It wasn't a simple flat fee and the price was based on the property's value, its complexity, and the level of detail in the engineered report.

Lenders move faster when the exit is obvious and supported by comps, not projections.Clean structureStraightforward ownership, clean title, no exotic entities, and a basic capital stack.

I work with many investors, and have done myself, who are looking to get rid of the continuous unknown of maintenance fees and get into a new property that needs no capital improvement for over 10 years. 

It’s a low-pressure way to get your feet wet, skip an assignment fee, and really learn what makes a property a good flip.

Fees, fees, and more fees.

They also take the payments from the tenants, then take their fee out of that and then pass the remainder on to the owner.