#ADU #accessorydwellingunit #realestate
Save 20-45% on the cost of building an ADU with Realm: f.realmhome.co...
Curious how much money you can make by building an accessory dwelling unit in your backyard and renting it out to tenants? I'm covering my method for determining the monthly cash flow potential from adding an ADU to your property. The example I use in this video is an ADU in the Bay Area of California, but this method can be applied in any real estate market. The first step is to determine the projected monthly rental income by analyzing your local rental market. I compiled a list of every ADU and JADU in the Bay Area and calculated the average rent and square footage for the area. The next step is to determine the monthly expenses for the addition of an ADU. In order to calculate expenses we have to find out how much it's going to cost to build our ADU and how we're going to pay for it. You can estimate the cost to construct an ADU by collecting bids from multiple builders and contractors. However, I utilize home advisory company Realm to provide me with accurate ADU building costs because they specialize in helping home owners design and build ADUs. There are several ways to finance an ADU including personal savings, a home equity loan, a HELOC, a construction loan, and a cash-out refinance. I use a home equity loan as an example. Don't forget to add property taxes and insurance into your monthly expenses. You can calculate your potential cash flow by taking your expected monthly rent and subtracting your monthly expenses. Even if your projected cash flow is positive, it doesn't necessarily mean building and renting out an accessory dwelling unit is a good investment. Stay tuned for a future video where I compare building and renting an ADU to other investment options.
Disclaimer: The information provided on this KZitem channel is for educational and entertainment purposes only and should not be construed as financial or investment advice. The content on this channel is not intended to be a substitute for professional financial or investment advice, and you should always do your own research and consult with a licensed financial advisor before making any investment decisions. The views and opinions expressed on this channel are solely those of the author and do not necessarily reflect the views of any organization with which the author may be affiliated. Investing involves risk, and past performance is no guarantee of future results. By accessing this channel, you acknowledge that you have read and understood this disclaimer.
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