Hello All,
Longtime reader, first time poster. Please be kind :)
Question: Should I sell my rental condo in Boise to build an ADU on my primary residence?
1. Rental: Class B Condo in good condition in highly desirable area. Paid cash $85,000 in 2013, now worth $260,000. Rent $1,100. Very low hassle.
2. Primary residence, SFH, no mortgage, in the most desirable part of Boise right now. Love my house, but too big. I am planning on turning my 550 sq. Ft garage into a permitted ADU. I’m eager to live in a smaller space I designed for myself. Plans done, builder on board, but no contract signed. I don’t need rental income from the house right now, but probably will in 2-4 years.
Hesitations:
1. Worry about loss of privacy and sound from renters in main house - we would share a well-insulated wall, but...
Separate but not sound-proof yard space.
2. More importantly, I would be missing out on crazy appreciation on the rental - 30% last year.
A 15% appreciation next year (likely as Boise is such a hot market), plus profit from rent, would be $45,000.
With a difference of only $750 a month, or $9,000 a year, between the condo rent and renting my PR and living in the ADU.
I don’t have the income to refinance either property, so selling the rental is the only way to build the ADU.
Should I wait a year or more to sell the rental and build the ADU in order to reap the appreciation and, hopefully, the stabilization of the cost and supply of building materials post-Covid?
A win-win situation, but I want make the most financially-sound decision.
Thank you!