I Bought a House in Redlands, CA for $425K and Built an ADU

Thinking about buying a home, but not sure how to afford it? Welcome to the Down Payment Diaries , where real people spill about how they saved and splurged on their path to homeownership. If you’d like to submit your own Down Payment Diary, please fill out the form here .

Today, a 42-year-old woman shares how she invested in a small home with room for an accessory dwelling unit in Redlands, California. 

What was your home experience when you were growing up? My parents didn’t own until later in life. I was always a go-getter and figured out how to reach my goal of homeownership earlier. I became a first-time homeowner at 26 and then purchased a second home at 29 with my ex.

When did you first start thinking about buying this home? After my divorce. Being a previous homeowner it was important to me to become a homeowner again and create stability.

Had you owned previously, or was this your first time as a homeowner? I had previously owned two homes with an ex. This was my first time owning all by myself. 

What were you looking for in this home? I wanted a lot that could accommodate an ADU. With the high cost of living in California and having to adjust to a one-income, single-parent household with two teenagers, it was important to create rental income. I also wanted the possibility of multi-generational living for my teens when they become adults.

What was your search like? I used a Realtor®, and together we looked at more than 30 homes. While my Realtor was great, I ended up doing my own research on ADUs and finding my own financing product to buy my home and build an ADU. As a result, I became a licensed Realtor to educate and share my homeownership journey.

How did you know this was the one? Location, location, location. It’s near downtown Redlands; my previous homes were in cul-de-sac suburban neighborhoods. The homes in Redlands are known to be cute and quaint. It has old-town vibes and is family oriented. 

Did you make other offers? After touring 30 homes I made one offer $30,000 over asking, and I was outbid. I continued my search, then finally made my second offer on my current home, which was accepted.

What offer did you make on this home?  I made a full asking offer, $425,000. 

What was the financing process like?  I financed my home with an FHA 203(k) loan, which also covered the construction cost of the ADU. To get the loan approved and funded, I had to get contractor bids. 

How did you save for the down payment? From the sale of my two previous homes.

How much did it cost to build the ADU? It cost $125,000. That includes permits, plans, construction costs, and appliances. It’s an all-electric home with a separate address. 

Did you set aside any money for repairs? I set aside $15,000 for my home to cover new interior paint, air conditioning, shutters, and landscaping and $35,000 for the ADU for additional change requests and appliances.

Do you have any takeaways from buying this home? It’s been a great investment. My home now appraises for $800,000, and the ADU rents for $2,000 a month. 

What advice do you have for prospective homeowners? There are many loan types, such as the one I used to buy and build an ADU. It’s also important to hire a Realtor that is creative and can think outside the box to help you reach your homeownership goals. 

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