Property Owner
Quiz – True or False?
You believe investing in real estate is a better and safer option compared to stocks and bonds.
Your property isn't in an HOA that prohibits DADUs.
You (or your parents) want to downsize into the DADU or create a passive income stream.
You’re not a builder or rental property manager.
You don’t know how to legally condominiumize your property and set up the HOA.
You don’t have enough capital to fund the entire DADU cost.
You don’t want alternative financing (personal loans, hard-cash lenders, liquidating retirement funds, etc.).
Your property is over 5,000 sqft (including the main home’s footprint).
You don’t want to rob a bank. 😂
If you answered True…
Then congratulations!
You may be a good fit as the Property Owner for SkyDADU.
SkyDADU is a one-stop-shop for all things DADU. We finance, build and manage DADUs all under the same umbrella.
But of course, we understand that your circumstances as the Property Owner may be different from others’. That’s why SkyDADU has tailored programs to meet your specific goals and financial situation.
Explore the different options below to see what may best suit your needs.
Designed for Life | Built for Income™ – which tailored program fits your goals?
Joint Venture
Do you (or your parents) want to move into a new DADU first—and sell your current home or your parents’ home later to fund it?
If so, you may qualify for $0 down / 100% financing—while SkyDADU takes care of the entire build process for you.
*Terms and conditions apply.
Partnership
Do you want to retain your DADU as a long-term passive income asset—offering more stability and predictability than traditional stock and bond investments?
The new law is upending municipal zoning by allowing DADUs to be built in what used to be considered the encroachment areas.
Hybrid
Do you have the funds to fully cover your DADU construction—but want to ensure it’s set up correctly?
Sockeye Direct
Do you have the funds to fully cover your DADU construction—and no intention of condominiumizing it, meaning it would remain part of the main home if sold?
If so, you don’t need SkyDADU. Sockeye Homes can turn your dream into reality by having you choose from the following 3 options:
- Using a DADU package
- Modifying a package, or…
- Drawing a custom plan from scratch to meet your needs and wants.
Example – Alex in a 50% Partnership with SkyDADU:
Cash-on-Cash Return (CoCR)
Cash-on-Cash Return (CoCR) for Property Owner:
CoCR is a key metric used in real estate investment to measure the annual return on the cash invested in a property. This metric provides you, the Property Owner, with a clear picture of your DADU’s profitability relative to your initial cash outlay. It helps you understand how much cash flow you can expect to receive as a percentage of your cash investment, making it a straightforward tool for assessing whether your DADU can be a good passive income stream or not.
Example – Alex, the Property Owner:
- Total DADU Construction Cost: $380,000
- Alex’s Investment: $190,000 (50% equity) + $9,500 (SkyDADU Legal Origination Fee of 5%) = $199,500
- Projected Rental Income:
- Monthly Rent: $4,000 – $700 (Projected Property Tax, Insurance and HOA Fee) = $3,300
- Annual Rental Income: $39,600
- Alex’s Share of Rental Income:
- Since Alex invested the minimum requirement of 50%, Alex receives 50% of the rental income:
- Alex’s Projected Annual Rental Income: $19,800
- Cash-on-Cash Return (COCR):
- COCR = $19,800 ÷ $199,500 = 9.92%
In this example, Alex earns a Cash-on-Cash Return of about 10% annually. Of course, the rent may not remain at $4,000 per month during the 5-year SkyDADU contract duration so the CoCR can vary based on the rental market conditions.
Return On Investment (ROI)
Return On Investment (ROI) for Alex in 5 years:
ROI in real estate measures the profitability of an investment by comparing the net profit to the initial cost plus other costs incurred over the 5-year period (such as maintenance & repairs beyond the HOA requirements, listing seller broker & buyer agent fee (5%), and the ECT [End-of-Contract Title Transfer] Fee at 1%).
- Total (Assumed) DADU Maintenance & Repair Cost Over 5 Years:
$6,000 including WSST - Alex’s Total Investment Cost over the 5 Years:
$199,500 + ($6,000 ÷ 2) = $202,500 - Alex’s Total Rental Income in 5 Years (from CoCR): $99,000
- DADU Projected Listing Price (Assuming $600,000 as the Baseline Value at DADU Completion with Bellevue’s Average Annual Appreciation [Source: zillow.com] of 9.4%): $1,008,305
- Listing Seller Broker & Buyer Agent Fees (2.5% x 2): $50,415
- ECT Fee (1%): $10,083
- Projected Net Profit for Alex (Alex Kept the 50% Equity Position for the 5 Years): $99,000 + [($1,008,305 – $50,415 – $10,083) x 50%] – $202,500 = $370,403
- Projected ROI for Alex: ($370,403 ÷ $202,500)*100 = 182.9%
In this example, Alex earns, projected not guaranteed, a 182.9% ROI in 5 years. But remember, this is assuming that Alex had the prerequisite capital of $202,500 in cash. So if Alex had to borrow to meet the prerequisite, then Alex would have to deduct the payments to calculate the CoCR and ROI. All in all, even if you have to finance a portion of the prerequisite, ROI will most likely come in favorable to the Property Owner because the lack of affordable housing is expected to persist for the next decade and beyond. (*NOTE: The numbers above are intended for illustration purposes only. The actual numbers may vary due to taxes and other transactional costs which are not accounted for in these numbers.)
What's the Next Step?
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