Return on Investment (ROI) and Financing Options
Accessory Dwelling Advisors, LLC offers an easier, less expensive way for home owners to improve their properties value and add cash flow to their budget by “coaching” them though the development process. One scenario is to build an 800 square foot ADU for an average cost of $200,000. Greater Manchester, NH area rent is $2.20 SF or $21,120 a year. If expenses are the typical 15% of gross, rental income is $17,952 for a 9% ROI, a better rate of return than many stocks and bonds*.
What if the owner decides to live in the ADU and rents the main house instead? The area rental rate for a larger building is $2 SF. Leasing a 2,500 SF house provides $60,000 a year. An average 20% expense rate for the structure yields $48,000 in net income, ROI of a whopping 24%, producing a four year pay back which ultimately increases the property’s value. This is a great way to supplement retirement income and build wealth.
If homeowner doesn’t have the ability to pay cash for construction of the ADU, there are several financing options available.
The following list is just a few of the financing options:
- Unsecured personal loan
- Home equity line of credit
- Cash out refinancing loan
- Short-term construction loan
- Construction to permanent loan
- FHA 203 (K) renovation loan
Accessory Dwelling Advisors works with client to determine the best course of action. A combination of sweat equity, savings and loans.
*We are not financial advisors and only provide material’s to help guide decisions.
