581: The Hidden Passive Income Source in Your Own Backyard w/That ADU Guy

Mar 10, 2022

Derek Sherrell, known as "That ADU Guy," is a leading expert on accessory dwelling units (ADUs) and helps homeowners unlock passive income potential. He discusses innovative ways to turn attics, basements, and garages into profitable ADUs without the need for extensive construction. Derek provides insightful tips on identifying ADU-friendly properties, navigating zoning regulations, and suggests financing strategies. His expertise sheds light on the financial benefits of integrating ADUs, emphasizing how they can enhance property value and generate sustainable income.

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ADVICE

ADU Criteria

Become an expert in ADU zoning, which is often easier than it sounds.
Consider if the property is suitable for long-term living and if the financials make sense.

INSIGHT

ADU Challenges

ADUs are a relatively new concept, so educating cities and neighbors about their benefits can be challenging.
Financing ADUs can also be difficult due to their novelty and perceived higher cost per square foot.

ADVICE

Funding ADUs

Align ADU plans with your investment goals, considering scaling versus immediate cash flow.
Explore financing options like home equity loans, HELOCs, or construction loans.

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What do you think of when we say ADU (accessory dwelling unit)? If you’re like most homeowners, you probably think of a back house, a mother-in-law suite, or a converted art studio. But what if you don’t have a home that comes with a pre-fitted accessory dwelling unit? What if you don’t want to put in the money (or time) to build one out. Are you left with any options, or are your ADU dreams dead in the dust?

If you’ve wanted to start building passive income streams through your primary residence, then we’ve got good news for you. With us today is Derek Sherrell, also known as “That ADU Guy”, precisely because he is THE person you want to talk to when it comes to accessory dwelling units on your property. Derek knows his stuff, consulting dozens of homeowners on how an ADU would fit into their property and how much passive income they could make as a result.

And it’s not just about building some other structure in your backyard. You can convert attics, basements, garages, and even portions of your house into accessory dwelling units. Not only does this allow you to save on the cost of new construction, but it also gives you another option to build wealth, pay down your mortgage, or simply profit from a rarely used portion of your home.

In This Episode We Cover:

The exact criteria homeowners should look for in potential ADU-friendly properties

Attached vs. detached ADUs and the benefits (and cash flow difference) of both

The four main challenges when building, financing, or strategizing an ADU

What to look for in existing ADU structures, whether it’s a garage, back house, or basement

How to become an ADU expert quickly (and for free) with simple city zoning information

And So Much More!

Links from the Show:

BiggerPockets Agent Finder

BiggerPockets Forums

Dave Ramsey website

Warren Buffet Forbes profile

Joe Asamoah's BiggerPockets profile

GC Real Estate

Check the full show notes here: https://www.biggerpockets.com/blog/real-estate-581

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