DADUs for Investors
Whether you’re an experienced real estate investor or a property owner looking to earn extra income, building a DADU for the Seattle rental market is one of the best investments you can make.
The Potential of Cash-Flow Positive From Day One
Investment DADUs provide a variety of benefits, from outstanding long-term wealth accumulation to a reliable income stream. If you are fortunate enough to have a property in the greater Seattle area that will accommodate a DADU, this is definitely worth considering.
Assuming you already own the property, your expected rate of return could be double what you would earn if you invested the same money in purchasing a new rental property. Put another way: If your goal is to earn $3,000 per month in rental income, a DADU from MyKabin might cost you half as much to earn that rental income, as compared to purchasing a single family home.
As a result, a MyKabin investment is one of the few real estate investments that has the potential to be cash flow positive from day one. This is an exceptionally high bar for real estate investments.
An Illustrative Example
It is imperative that you do your own research and talk with experts to evaluate your specific project. Factors to consider include the costs to build, the ongoing operating costs, and your anticipated rental income.
DADUs as an investment provide outstanding potential for long-term wealth creation. Rents in Seattle tend to grow an average of 3% per year, keeping pace with inflation1. Because the cost of your purchase is fixed in today’s dollars, every year that rents increase, your investment returns grow stronger.
|SFR Purchase||DADU Purchase|
|Cost of main home||$750,000||$365,000|
|Monthly mortgage (30 yrs at 7%)||$4,990||$2,430|
|Monthly rental income||$3,000 ($36k/yr)||$3,000 ($36k/yr)|
|Revenue available for insurance, maintenance, etc.||-$1,990||$570|
|Cap rate||4.8% ($36k / $820k)||9.9% ($36k / $365k)|
An Inflation Hedge
Inflation-driven growth is particularly relevant. Today’s inflation rate is higher than it has been for many decades. In this environment, rental investments are a powerful hedge. Rental rates continue to rise while fixed mortgage rates remain steady.
Taking a much longer term view, owning a home in Seattle has been an outstanding driver of wealth creation. Since 1995, Seattle area home prices have increased approximately 500%2.
Other, more advanced uses of DADUs in real estate investment include:
- Converting the property into a condominium structure to enable sale of the DADU, separate from the original house.
- Purchasing a property with the intention of adding a DADU, in order to increase the overall rate of return.
- Building two MyKabins on a single lot, where one is a DADU and one is an ADU, if both the lot and local permitting will accommodate it.
At MyKabin, we have years of experience working with DADU investors, from real estate professionals to entrepreneurial homeowners. We understand you and we cater to your needs:
- We offer homes which are specifically optimized for investment returns.
- We have streamlined the entire process to make it more efficient and require less of your time.
- Our focus on DADUs and our operational efficiencies enable us to deliver a higher quality product at a better value than anyone else in the Seattle area.
We’re excited to work with you to help make your investment success a reality.
Choosing the Right Home
MyKabin offers models that are optimized for rental or resale.
The Kenai is a top-seller. 1,000 sq. ft. home that requires only 500 sq. ft. land. Spacious open concept on main floor a ½ bath and 2 bedrooms, 2 baths on the second floor.
The Yukon offers 3 beds, 2 baths and a one-car garage. The main living space is upstairs, with vaulted ceilings and plenty of natural light.
Our Roosevelt and Sitka models, also around 1,000 square feet, are beautiful one-story homes better suited for larger properties with more land.
The Sequoia, Teton and Olympic II models are smaller two-story homes that are optimized for rentals, thanks to their efficient build costs and efficient use of square footage of land.
No matter which model you go with, new construction is typically easier to rent. Landlords and renters appreciate the benefits that a new home offers including the comfort of well-insulated walls and ceilings and beautiful, reliable new appliances. Our homes are incredibly efficient, built to Built Green 4-star standards, not just sustainable, but also more comfortable during the coldest and hottest months!
Looking to Invest in Your Backyard?
We’ll send you a no-obligation feasibility assessment to see if your property can accommodate a DADU.
We will never spam, sell, or share your personal information with any third party (we hate that too).
Interested in something else related to DADUs, Backyard Homes or Granny Flats? Give us a call or send us an email.
1 Skyrocketing Seattle-area rents leave tenants with no easy choices, Seattle Times, Aug 14, 2022
2 Federal Reserve Economic Data, Nov 29, 2022