When it comes to real estate investing, creativity and strategic planning are just as important as capital. One of our clients is a great example — they’re in the final stages of a fix-and-flip project paired with the construction of a detached accessory dwelling unit (DADU). Based on current projections, they’re expected to walk away with an impressive profit of over $350,000 once completed.
Here's a closer look at how this project is coming together, and how Certain Lending provided the financing to make it happen.
The Fix-and-Flip: Setting the Stage
Our client spotted an opportunity in a well-located but outdated 2,000-square-foot home. Originally configured as a two-bedroom, one-and-a-half-bath property, it had strong potential with the right upgrades. He purchased the home for $850,000, recognizing that strategic renovations could dramatically increase its value.
Existing Home Renovation Plan:
- Cost: $310,000
- Scope: Reconfiguring the layout to add an extra bedroom and bathroom, turning it into a highly marketable three-bedroom, two-and-a-half-bath home.
After renovations, the total investment in the main home would reach approximately $1.16 million, not accounting for holding and closing costs.
Existing Home Projected After-Repair Value (ARV):
- Conservative estimate: $1.25 million
- Potential upside: Even higher, depending on market trends at the time of listing.
While the sale of the renovated home would essentially allow the investor to break even after costs, this was only part one of the strategy.
The Real Win: Adding a DADU
Many investors stop at the fix-and-flip — but our client had a bigger vision.
Behind the main home, the property featured a back alley lot with enough space to build a detached accessory dwelling unit (DADU). Instead of leaving that value on the table, he decided to invest further to maximize the property's full potential.
DADU Plan:
- Construction Cost: $350,000
- Specs: 1,000 square feet, three bedrooms, two bathrooms.
Building the DADU turned this into a two-unit opportunity, significantly boosting the overall return.
Ultimately, it resulted in the development of two separate structures on individual parcel numbers, allowing them to be sold independently.
Projected Sale Price for DADU: $800,000
With the DADU completed and sold separately, the client is positioned to make upwards of $350,000 in profit on this project — all from one initial purchase.
Why This Strategy Worked
Several key factors made this project a success:
- Seeing the Full Potential:
- Many investors would have overlooked the value of the back lot. By thinking beyond the initial home renovation, the client unlocked an additional revenue stream.
- Smart Renovations:
- Instead of over-improving the home beyond what the neighborhood could support, the renovations were practical, market-driven, and positioned the property competitively.
- Leveraging Strategic Financing:
- Certain Lending provided flexible financing options that made it possible to acquire the property, complete the renovation, and fund DADU construction — all under one loan. .
- Timing the Market:
- With strategic planning, the investor is on track to complete renovations and new construction while the market remains strong for turnkey homes and newly built DADUs.
How Certain Lending Helped
Getting traditional financing for a combined fix-and-flip and new construction project can be challenging. Banks often shy away from unconventional projects or require large down payments that tie up investor capital.
At Certain Lending, we understand the needs of real estate investors. Here's how we helped in this project:
- Acquisition Financing: We provided a competitive loan for the purchase, allowing our client to move quickly on the opportunity.
- Renovation and Construction Loans: Through flexible loan structures, we funded both the home renovations and DADU construction.
- Fast Turnaround: Speed matters in real estate investing. Our streamlined process helped the client close on the purchase and access construction funding without unnecessary delays.
When you work with Certain Lending, you’re not just getting a loan — you’re getting a partner who understands real estate investing and can help you unlock opportunities others might miss.
Final Thoughts: Thinking Beyond the Obvious
This project is a perfect example of why successful real estate investing often means thinking a few steps ahead. It wasn’t just about fixing up an old home; it was about maximizing the full value of the property with smart additions like a DADU.
Our client took a creative approach, partnered with the right lender, and executed the project with discipline — and the result speaks for itself: a $350,000+ profit from a single investment.
If you’re ready to think bigger on your next investment property, Certain Lending is here to help you finance your vision.
Check out the full story in Israel Lopez’s Instagram below:
