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Anyone Refinanced after converting their garage to an ADU? (Los Angeles)

Hi All,

Shopping for a home in Hawthorne, CA with intention to convert garage to an ADU and rent it out on AirBnB.

Assuming it takes 6-8 months to complete (permits are taking 4 months due to covid) I was planning to get an appraisal and do a cashout refi to pay back some family members. Income is healthy and I'm not concerned about putting 6 months onto the back of a 30 year loan.

1) Equity in this town is growing at 45K every 6 months for the last 2 years. So there is that.

2) My main question is has anyone done this? Appraisals on ADU's are fairly unknown. I've seen simliar price per sq ft as homes suggested (but this isnt adding sq ft), some suggest comps which are few and far between, and ive seen projected rental income as a factor. The problem with this is I'm planning to refi before its even rented out for a month.

Has anyone been through this? Any idea on the value of the adu itself?

Any responses much appreciated!

​

**side note: homes are going for 900K so over the 822K conforming loan limit. This means a HELOC or construction loan wont make much sense because I'll have already maxed that out. That's part of the rationale for the refi.

submitted by /u/Key-Ad-535
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source https://www.reddit.com/r/RealEstate/comments/lsniei/anyone_refinanced_after_converting_their_garage/
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