Successful multifamily property investor Rob Rowsell explains why an ADU (Accessory Dwelling Unit) might be a good idea for real estate investors to build on to their investments. Specifically, are you buying a property in order to to resell it later? Then an additional dwelling space (aka granny flat, mother-in-law suite, guest house unit) will increase the resale value. Is it always a good investment, though?
Should You Build An ADU For Your Property Investment?
Our friend JR asked the question about Rob’s rationale for adding an ADU to a property. What was his timeline for a return on that investment?
Starting at the beginning, Rob uses the example of a California real estate investor adding an ADU to their new purchase. On the surface, this does not add up to a good investment. This new structure will likely not increase your cash flow.
Consider all the expenses and red tape involved in building a habitable, sturdy, waterproof building. It must be up to code, well insulated, and comfortable enough for a guest to stay in. Perhaps your tenant might use it as a man cave or workshop. How much upkeep expense will this add to your plate?
On the other hand, you stand to gain a considerable amount in resale value. Consult with your investors, and make sure that they also see future benefits. Then, make sure they pitch in their share, since they will also reap the benefits when it’s time to sell the property.
Rob shares an example of a structure that he plans to pay his home’s mortgage with. A tenant off the street will rent it as living space. Eventually, Rob plans to use it to park his motor home and house his toys. He will also install a lift for automotive repair.
Join Our Multifamily Investing Community Today
Do you own your own multifamily rental properties? If not, do you plan to do so one day? Then you should consider joining our online financial group, the ATL Inner Circle Community! Each month, investing pro Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not quite as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Sign up today!
