How to Unlock Your Home’s Hidden Passive Income Stream (ADUs 101)

BiggerPockets Real Estate Podcast

There’s a hidden passive income stream in your basement, backyard, or garage, and only one investing strategy can unlock it. More and more homeowners and landlords are using this strategy to pay their mortgages, pad their pockets with cash flow, and increase their home values significantly. Of course, we’re talking about ADUs (accessory dwelling units), the rental properties that states are begging you to build, and you can do so right now with the home you already own.

To help you affordably (and profitably) build your first ADU, we brought on Derek Sherrell, AKA That ADU Guy, to give you the beginner steps to your first attached (or detached) investment. We’re walking through which properties have the best ADU opportunity, how much an ADU costs to build or convert, how much an ADU will make, how to fund and finance your first ADU, and how Derek builds an ADU from scratch in just 90 days!

Derek often makes an infinite return on his ADU investments, and he’s teaching you how to do the same! If you’re in an expensive state like California, Oregon, or Washington, this strategy is even more effective as you can collect more rent AND do so without local regulations slowing down your ADU progress!

In This Episode We Cover:

How much an ADU costs to build, and the wild returns Derek is making in 2025

The most affordable ADU conversion that will boost your property’s cash flow

Three crucial beginner tips when designing and building your first ADU

How to finance your ADU conversion/build and why Derek loves HELOCs

Best states for building ADUs and who to call BEFORE you decide to build

And So Much More!

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Is Building an Accessory Dwelling Unit (ADU) a Worthwhile Investment

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