BiggerPockets Real Estate Podcast

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


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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!


Links from the Show

Join BiggerPockets for FREE

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BiggerPockets YouTube

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Maximize Your Real Estate Investing with a Self-Directed IRA from Equity Trust

Save $100 on Real Estate’s Biggest Event of the Year, BPCon2025

Grab Dave’s Book, “Start with Strategy”

Sign Up for the BiggerPockets Real Estate Newsletter

Find Investor-Friendly Lenders

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

Derek's BiggerPockets Profile

Derek's Website

Connect with Dave



Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1097

Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected].

Learn more about your ad choices. Visit megaphone.fm/adchoices

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