Everything You Need in One Place
This chapter consolidates the tools, templates, checklists, and resources referenced throughout the playbook. Use it as a quick-reference guide as you source, underwrite, build, and manage ADU investments.
RISE: Your ADU Deal Analyzer
Access RISE at: rise.revcaplending.com
RISE (Real-Time Investment Scenario Engine) is the deal analysis tool built by Revolution Realty Capital specifically for real estate investors. It's referenced throughout this playbook because it does what spreadsheets can't — models full deal scenarios with financing, returns, and sensitivity analysis in minutes.
RISE Modes and When to Use Them
| Mode | Use When | Key Outputs |
|---|---|---|
| Fix & Flip | Modeling a purchase, ADU build, and sale | Net profit, cash-on-cash ROI, margin of safety, deal waterfall, cash required to close |
| Ground-Up | Modeling new construction (including ADU on a vacant lot or full rebuild) | Same as Fix & Flip, structured for ground-up construction budgets |
| DSCR / Rental | Modeling a buy-and-hold or BRRRR with long-term rental income | DSCR, monthly cash flow, cash-on-cash return, refinance proceeds |
RISE Feature Quick Reference
| Feature | What It Does |
|---|---|
| Purchase / Refinance toggle | Switch between analyzing an acquisition or a refinance of a property you already own |
| Financing section | Input LTV, interest rate, origination points, and loan term to model actual debt costs |
| "Model with Rev Cap Financing" button | Auto-populates financing fields with current Rev Cap loan terms |
| "Get Financing Terms" CTA | Submit your deal to Rev Cap for a term sheet based on the scenario you've modeled |
| "Export PDF" button | Download a professional deal summary to share with partners, lenders, or your team |
| "Request Callback" button | Connect directly with a Rev Cap loan officer to discuss your deal |
How to Use RISE for ADU Deals (Step by Step)
For a flip (garage conversion, build and sell):
- Select Fix & Flip mode
- Enter purchase price and closing costs
- Enter ADU construction budget (include permits, fees, contingency) in the rehab budget field
- Enter your ARV (after-repair value — the expected sale price with the ADU complete)
- Set hold period (include permit time + construction time + marketing/sale time)
- Enter financing terms (or click "Model with Rev Cap Financing")
- Review: net profit, ROI, cash required to close, and margin of safety
For a rental hold / BRRRR:
- Select DSCR / Rental mode
- Enter the property's post-ADU appraised value
- Enter combined monthly rent (main dwelling + ADU)
- Enter operating expenses: taxes, insurance, management, maintenance, vacancy
- Enter DSCR loan terms (or click "Model with Rev Cap Financing")
- Review: DSCR ratio, monthly cash flow, cash-on-cash return
- For BRRRR: compare refinance loan proceeds to your total cash invested
For comparing exits: Run the same property through multiple RISE modes to compare:
- Flip profit vs. rental cash flow vs. BRRRR capital return
- This is the multi-exit analysis described in Chapter 13
ADU Cost Estimator Guide
Use these ranges for preliminary budgeting before you get contractor bids. These are national averages — your market will vary.
Construction Cost Ranges by ADU Type
| ADU Type | Sq Ft Range | Cost per Sq Ft | Total Cost Range |
|---|---|---|---|
| Garage conversion | 300–600 | $150–$250 | $45,000–$150,000 |
| Shed / accessory structure conversion | 150–400 | $175–$300 | $26,000–$120,000 |
| Ground-up detached ADU | 400–1,000 | $250–$400 | $100,000–$400,000 |
| JADU (within existing structure) | 150–500 | $100–$200 | $15,000–$100,000 |
| Attached addition | 400–800 | $225–$350 | $90,000–$280,000 |
Common Additional Costs (Often Missed)
| Cost Item | Typical Range | Notes |
|---|---|---|
| Permits | $1,000–$8,000 | Varies widely by jurisdiction |
| Impact fees (school, park, fire) | $0–$40,000 | Check if your state has waived these for ADUs |
| Sewer/water connection | $2,000–$15,000 | Required for new structures on separate connections |
| Utility meter installation | $1,000–$5,000 per meter | Electric, gas, water — each may have separate fees |
| Architectural/engineering plans | $3,000–$15,000 | Pre-engineered plans: $3K–$5K; Custom: $8K–$15K |
| Soils/geotech report | $500–$1,500 | Required in many jurisdictions; always worth getting |
| Survey | $500–$1,500 | Required if lot lines or setbacks are in question |
| Site work (grading, demo, hauling) | $2,000–$15,000 | Depends on existing site conditions |
| Landscaping restoration | $2,000–$10,000 | Replacing what construction destroyed |
| Fire sprinklers | $3,000–$8,000 | Required in some jurisdictions for ADUs |
Important: The "commonly missed" costs in this table account for $15,000-$100,000+ in expenses that never appear in a contractor's base bid. Add every applicable line item to your RISE model before you make an offer — impact fees, utility connections, and fire sprinklers are the three that blow up budgets most often.
Quick Budget Formula
Conservative total project budget: = Construction cost + (Permits + Fees) + Soft costs + 15% contingency
Example — 500 sq ft ground-up detached ADU:
- Construction: 500 x $300 = $150,000
- Permits and fees: $12,000
- Plans and engineering: $8,000
- Site work: $5,000
- Contingency (15%): $26,250
- Total: $201,250
Pro Forma Template
Use this template to organize your ADU deal analysis. Fill in the blanks and plug the totals into RISE.
Acquisition
| Line Item | Amount |
|---|---|
| Purchase price | $ |
| Closing costs (estimate 2–3% of purchase) | $ |
| Inspection / due diligence costs | $ |
| Total acquisition cost | $ |
Construction / Rehab
| Line Item | Amount |
|---|---|
| ADU construction (contractor bid) | $ |
| Main house rehab (if applicable) | $ |
| Permits and fees | $ |
| Plans and engineering | $ |
| Site work | $ |
| Utility connections / meters | $ |
| Landscaping | $ |
| Contingency (15% of above) | $ |
| Total construction cost | $ |
Financing (Construction Phase)
| Line Item | Amount |
|---|---|
| Loan amount | $ |
| Interest rate | % |
| Monthly payment (interest-only) | $ |
| Origination fee (points) | $ |
| Loan term | months |
| Total interest paid over hold period | $ |
| Total financing cost | $ |
Total Project Cost
| Line Item | Amount |
|---|---|
| Total acquisition | $ |
| Total construction | $ |
| Total financing costs | $ |
| Holding costs (taxes, insurance, utilities during construction) | $ |
| Total all-in cost | $ |
Exit Analysis — Sale
| Line Item | Amount |
|---|---|
| Expected sale price (ARV) | $ |
| Less: agent commissions (5%) | $ |
| Less: closing costs (1%) | $ |
| Less: seller concessions | $ |
| Net sale proceeds | $ |
| Net profit (net proceeds – total cost) | $ |
| ROI (net profit / cash invested) | % |
Exit Analysis — Rental Hold
| Line Item | Monthly | Annual |
|---|---|---|
| Gross rent (all units combined) | $ | $ |
| Less: Vacancy (5–8%) | $ | $ |
| Less: Property management | $ | $ |
| Less: Maintenance reserve | $ | $ |
| Less: Property taxes | $ | $ |
| Less: Insurance | $ | $ |
| Less: Utilities (if landlord-paid) | $ | $ |
| Net operating income (NOI) | $ | $ |
| Less: Debt service (P&I) | $ | $ |
| Net cash flow | $ | $ |
| DSCR (gross rent / debt service) | ||
| Cash-on-cash return (annual cash flow / cash invested) | % |
Permitting Checklist
Use this checklist for every ADU project. Adapt to your jurisdiction.
Pre-Submittal
- Confirm ADU is permitted by right in the zoning district
- Verify lot size meets minimum requirements
- Confirm setback requirements (side, rear, front)
- Check lot coverage and FAR (floor area ratio) limits
- Verify height restrictions
- Confirm parking requirements (or exemptions)
- Check owner-occupancy requirements (if any)
- Review CC&Rs and HOA rules for restrictions
- Get a survey if lot lines or setbacks are uncertain
- Order soils/geotech report if required or recommended
- Identify all applicable fees (impact, connection, utility)
Plan Preparation
- Hire architect or use pre-approved plans
- Ensure plans include: site plan, floor plan, elevations, structural, mechanical, electrical, plumbing, Title 24 energy compliance (California) or equivalent
- Include fire sprinkler design if required
- Include landscape/drainage plan if required
- Include utility connection plan
Submittal and Review
- Submit complete plan set to building department
- Pay plan check fees
- Track plan check status (call weekly if no online portal)
- Respond to plan check corrections within 5 business days
- Resubmit corrected plans
- Obtain approval and pull building permit
- Pay permit fees and any applicable impact fees
- Post permit at job site before construction begins
During Construction
- Schedule inspections at required milestones (foundation, framing, rough plumbing/electrical/mechanical, insulation, drywall, final)
- Correct any failed inspection items promptly
- Keep a copy of approved plans on site at all times
- Document any field changes (may require plan revision and re-approval)
Close-Out
- Pass final inspection
- Obtain Certificate of Occupancy (CO) or Certificate of Completion
- Request final utility connections and meter installation
- Update property address with post office (if ADU has a separate address)
- Notify insurance company of completed ADU
- Update property tax records (assessor will do this, but verify)
Contractor Interview Questionnaire
Use these questions when vetting contractors for your ADU project (see Chapter 6 for the full team-building framework).
Qualifications
- Are you licensed and insured? (Verify license number, general liability amount, and workers' comp coverage)
- How many ADU projects have you completed in the last 2 years?
- Can you provide 3 references from ADU clients? (Call them. Visit a completed project if possible.)
- What's your experience with this specific ADU type? (Garage conversion, ground-up, etc.)
- Do you handle permitting, or do I need to manage that separately?
Scope and Pricing
- Will you provide a fixed-price bid or a cost-plus estimate?
- What's included in your bid? What's excluded? (Get this in writing.)
- How do you handle change orders? (Process, approval, pricing)
- What's your payment / draw schedule?
- Is there a retention holdback? (Typically 5–10% held until final completion)
Timeline and Process
- What's your realistic timeline for this project, including permitting?
- How many projects do you run concurrently?
- Will you be on-site daily, or do you use a site superintendent?
- How do you communicate progress? (Weekly updates? App? Email?)
- What happens if the project falls behind schedule?
Warranty and Close-Out
- What warranty do you provide on workmanship? (Industry standard: 1 year minimum)
- How do you handle warranty claims after project completion?
- Will you provide lien releases from all subcontractors at completion?
"Is My Property ADU-Ready?" Self-Assessment
Answer these 10 questions to determine if your property is a strong ADU candidate.
| # | Question | Yes | No | Notes |
|---|---|---|---|---|
| 1 | Is the property zoned for ADU construction? (Check local zoning code or call the building department.) | |||
| 2 | Does the lot size meet the minimum for an ADU in your jurisdiction? | |||
| 3 | Is there physical space for an ADU? (Backyard, side yard, existing structure to convert, upper floor to add.) | |||
| 4 | Can you meet required setbacks? (Typically 4 ft rear and side for ADUs.) | |||
| 5 | Is there access to sewer/septic for the ADU location? | |||
| 6 | Is there access to water and electrical service for a new unit? | |||
| 7 | Are there any deed restrictions, CC&Rs, or HOA rules that prohibit an ADU or accessory structure? | |||
| 8 | Are there trees, easements, or utility lines in the proposed ADU location that would prevent or complicate construction? | |||
| 9 | Is there rental demand in the neighborhood for the type of unit you'd build? (Check rental listings and talk to a local PM.) | |||
| 10 | Does the expected rent from the ADU justify the construction cost? (Use RISE to model the return.) |
Scoring:
- 8–10 Yes: Strong ADU candidate. Proceed to detailed feasibility and underwriting.
- 5–7 Yes: Possible, but investigate the "No" answers. Some may be deal-killers; others may be solvable.
- 0–4 Yes: This property likely isn't a strong ADU candidate. Consider a different property or strategy.
Pro Tip: Print this 10-question self-assessment and bring it with you when evaluating properties. Scoring 8+ before you run the numbers in RISE saves you hours of underwriting on properties that were never going to work.
Glossary of Key Terms
| Term | Definition |
|---|---|
| ADU | Accessory Dwelling Unit — a secondary residential unit on a single-family lot |
| ARV | After-Repair Value — the estimated property value after renovations/construction are complete |
| Bridge loan | Short-term loan (typically 6–18 months) used to acquire and renovate/build before refinancing or selling |
| BRRRR | Buy, Rehab, Rent, Refinance, Repeat — a strategy for recycling capital through sequential deals |
| Cap rate | Capitalization rate — annual NOI divided by property value. Used to value income-producing properties. |
| CC&Rs | Covenants, Conditions, and Restrictions — rules recorded against a property, typically by an HOA or developer |
| CO | Certificate of Occupancy — issued by the building department when a structure is approved for occupancy |
| Cost segregation | A tax strategy that reclassifies building components into shorter depreciation categories for accelerated deductions |
| DSCR | Debt Service Coverage Ratio — monthly rent divided by monthly mortgage payment (P&I). Lenders typically require 1.0–1.25 minimum. |
| DSCR loan | A loan underwritten based on the property's rental income (DSCR) rather than the borrower's personal income |
| Draw schedule | A payment schedule tied to construction milestones — the lender disburses funds as each stage is completed and inspected |
| FAR | Floor Area Ratio — the ratio of total building square footage to lot size. Zoning codes use FAR to limit building density. |
| GC | General Contractor — the licensed contractor responsible for managing the construction project |
| Impact fees | One-time fees charged by local governments to fund infrastructure (schools, parks, sewer, fire) impacted by new development |
| JADU | Junior Accessory Dwelling Unit — a small ADU (typically under 500 sq ft) created within the existing footprint of a home |
| LTV | Loan-to-Value ratio — the loan amount divided by the property value. An 80% LTV loan on a $500K property = $400K loan. |
| NOI | Net Operating Income — gross rental income minus operating expenses (before debt service) |
| REPS | Real Estate Professional Status — an IRS designation that allows rental losses to offset ordinary income |
| RISE | Real-Time Investment Scenario Engine — Rev Cap's deal analysis tool at rise.revcaplending.com |
| RUBS | Ratio Utility Billing System — a method of dividing shared utility costs among tenants based on a formula |
| Setback | The minimum distance a structure must be from the property line. Zoning codes specify front, side, and rear setbacks. |
| 1031 exchange | A tax-deferred exchange of investment properties under IRC Section 1031 |
State-by-State ADU Resource Links
ADU regulations change frequently. Use these resources for current information, but always verify with the local building department.
States with Comprehensive ADU Legislation
| State | Key Legislation | Resource |
|---|---|---|
| California | AB 68, AB 881, SB 9, AB 1033 | California HCD ADU page; local city planning department websites |
| Oregon | HB 2001 | Oregon DLCD ADU resources |
| Washington | HB 1337 | Washington Commerce Department |
| Colorado | HB 24-1152 | Local municipality planning departments |
| Vermont | Act 47 (2023) | Vermont Housing Finance Agency |
| Montana | SB 245, SB 382 | Local planning departments |
| Connecticut | PA 21-29 | CT DECD housing resources |
States with Growing ADU Activity
| State | Notes | Resource |
|---|---|---|
| Texas | City-by-city (Austin, Houston, San Antonio have ADU provisions) | Local municipal codes |
| Florida | SB 1718 and local ordinances | Local planning departments |
| Georgia | Atlanta and metro cities have ADU ordinances | Local zoning codes |
| Arizona | Phoenix, Tucson, Scottsdale have ADU-friendly policies | City planning departments |
| North Carolina | Charlotte, Raleigh, Durham have ADU provisions | Local UDO / zoning codes |
National Resources
| Resource | Description |
|---|---|
| AARP ADU Model State Act and Local Ordinance | Template legislation and local ordinance database |
| Accessory Dwellings (accessorydwellings.org) | Research, news, and policy tracking for ADUs nationwide |
| Your local REIA (Real Estate Investors Association) | Networking, local market intelligence, and contractor referrals |
| Local building department | The definitive source for your jurisdiction's ADU rules, fees, and process |
Next Steps: From Playbook to Action
You've read the playbook. You understand the strategies, the financing, the construction process, the tax benefits, and the risks. Now it's time to act.
Step 1: Assess your starting position. Use the "Is My Property ADU-Ready?" self-assessment above — or, if you're acquiring a new property, use the Deal Sourcing & Underwriting framework from Chapter 4.
Step 2: Model the deal in RISE. Go to rise.revcaplending.com and run your numbers. Try multiple scenarios. Stress-test your assumptions.
Step 3: Build your team. Start with the three most critical hires: a lender who understands ADU financing, a contractor with ADU experience, and a CPA who works with real estate investors. See Chapter 6 for the interview framework.
Step 4: Get financing terms. Click "Get Financing Terms" in RISE or contact Revolution Realty Capital directly. We'll review your deal, discuss loan options, and give you a term sheet so you can move with confidence.
Step 5: Execute. Permit, build, lease, refinance — or sell. Follow the frameworks in this playbook, manage the project actively, and let the numbers work.
This playbook gave you the knowledge. RISE gives you the math. Revolution Realty Capital gives you the financing. The ADU opportunity is real, the economics are proven, and the tools are in your hands. Open RISE, model your first (or next) ADU deal, and see what's possible. When you're ready to move, we're ready to fund it.