Podcast Summary: The Science of Flipping

Episode: The ADU Playbook: Build Wealth With Accessory Dwelling Units | Kevin Trinh

Host: Justin Colby | Guest: Kevin Trinh

Date: October 17, 2025

Overview

This episode of The Science of Flipping dives deep into the world of Accessory Dwelling Units (ADUs) as a powerful strategy for real estate investors to build wealth, generate significant cash flow, and maximize property value. Host Justin Colby interviews Kevin Trinh—a seasoned contractor, investor, and leading ADU mastermind—about every aspect of the ADU business model. The conversation covers ADU fundamentals, profit strategies, regional trends, construction challenges, financing, rental models, and unique exit options, all geared toward listeners eager to capitalize on this growing trend.

Key Discussion Points & Insights

1. What Are ADUs and Why the Hype?

Timestamp: 01:14 – 04:24

• Definition & Basics:

  • ADUs (Accessory Dwelling Units) allow property owners to add a secondary small unit (typically 800–1,000 sq. ft.) in the backyard of an existing single-family home.
  • Purpose: “ADU is one of the new trends… the revolution right now in the real estate investing market.” — Kevin Trinh (01:14)
  • These units can spike equity, increase rental income, and provide affordable housing in dense areas.

• Zoning & Lot Requirements:

  • Minimum lot size is about 5,000–6,000 sq. ft.
  • No parking required, minimal setbacks, and flexibility on unit size, especially in places like San Diego.
  • “The simplicity of an ADU…no parking requirements, very minimal restriction. Setbacks are usually still that 4–5 ft range.” — Kevin Trinh (03:11)

2. Location Strategy & Neighborhood Targeting

Timestamp: 03:46 – 04:25

• Best neighborhoods: Focus on “B to C” areas for optimal cash flow and equity (“Never A, either”—high-end neighborhoods resist change, while “D” neighborhoods underperform for appreciation).
• Importance of being “hyper local” and understanding specific market conditions.

3. Regional Adoption & Legislative Landscape

Timestamp: 04:25 – 07:51

• ADUs are already prevalent and still expanding in West Coast states, with growing adoption in East Coast hubs and trickling into central US markets.
• Key states: California, Washington, Oregon, Texas, Florida, New Jersey, New York, Massachusetts.
• Legal frameworks and consistency still vary city to city; only about 10–12 states have comprehensive state laws supporting ADUs.

4. ADU Construction Process & Timelines

Timestamp: 05:21 – 06:34

• Contractor's perspective:
  • Permits possible in 6 months, typical construction in another 4–6 months—entire process can be done in about a year.
  • Multiple ADUs can be built on a single property, especially when leveraging both two-story structures and garage (as JADU: Junior Accessory Dwelling Unit) conversions.

5. Business Models: ADU for Cash Flow, Value, and Scale

Timestamp: 08:03 – 09:57

• Traditional “BRRRR on steroids”: Buy a property, add ADUs to boost equity and rental income, then cash-out refi, hold, or sell.
• “Equity doesn't pay the mortgage. Cash flow pays the mortgage, bro.” — Kevin Trinh (09:33)
• Entitlement play: Acquire and entitle properties for ADU use, keep best ones, sell/flip the others as turnkey opportunities to investors.
• Short-term vs. long-term: ADU models can be stretched across short, mid, and long-term rental strategies for further diversification.

6. ADU Unit Configurations & Features

Timestamp: 12:33 – 14:24

• Potential for 3+ units on a standard lot:
  • E.g., Main house, two-story detached/attached ADU (upper/lower units), and garage conversion.
• Unit specs: Studios, 1-bed, or 2-bed units possible; require full baths but not parking spaces.
• “The studio is a garage conversion… still has a one bath, one full bath and one bedroom and a small kitchenette. So, like, almost like a studio.” — Kevin Trinh (14:24)

7. Financing Challenges & Lending Trends

Timestamp: 15:31 – 17:37

• Construction loans are available for projects under four units; larger “bonus program” projects may be considered commercial, making loans harder to secure.
• Lack of comps in emerging ADU markets can complicate appraisals and lending.
• Anticipation: “Government… is going to get into backing up these ADU loans… we can potentially go out and lend to ADU investors in the future as well. That’s a big play, bro.” — Kevin Trinh (17:52)

8. Cost and Profitability Snapshot

Timestamp: 18:32 – 19:09

• Build costs: Typically $150–180k for a 600-sq. ft. unit, $300–400k for double units.
• Resale values: In SoCal, an ADU comps for ~$400–500k; Seattle, ~$700k per unit.
• Flip potential: “You’re making 400,000 spread on these.” — Kevin Trinh (18:53)

9. Long-Term vs. Short-Term Hold Strategies

Timestamp: 19:34 – 20:53

• In emerging markets (less ADU precedent/comps): Be prepared for a “buy and hold” play of 10 years+ for maximal gain.
• “When it comes, you’re ready for this play.” — Kevin Trinh (19:51)

10. Construction & Infrastructure Details

Timestamp: 22:13 – 23:09, 24:54 – 25:28

• All utilities (water, electric, sewer) usually tie in at street, not from main house.
• Watch out for challenging lots (avoid hillsides); flat lots are far easier for ADU build-outs.

11. Exit Strategies: Condo Mapping & New Opportunities

Timestamp: 27:49 – 29:37

• Unique opportunity: Some regions (California, Seattle) now allow “condo-mapping” ADUs—sell them off individually, like condos.
  • “Eventually you’re able to get parcels on these, condo mapping, sell it individually.” — Kevin Trinh (28:29)
• Multiple exits: can cash flow, hold, or sell-off units separately.
• Distinct from “pad splits” (multiple bedrooms in one home)—ADUs are more sustainable, salable, and attractive to institutions.

12. Lessons Learned: Growth, Failure, & Foundations

Timestamp: 33:31 – 36:18

• Both host and guest reflect on scaling pains—too much, too fast without a solid business foundation.
• “Passive income is not passively built. It is passive when it's built.” — Kevin Trinh (35:20)
• “Just remember: build deep, build up.” — Host Justin Colby (36:15)

Notable Quotes & Memorable Moments

• “ADU is one of the new trends… the revolution right now in the real estate investing market.” — Kevin Trinh (01:14)
• “The simplicity of an ADU…no parking requirements, very minimal restriction.” — Kevin Trinh (03:11)
• “Always buying the B to C neighborhoods. Never A either.” — Kevin Trinh (03:48-03:51)
• “Equity doesn’t pay the mortgage. Cash flow pays the mortgage, bro.” — Kevin Trinh (09:33)
• “The ADU space has grown 15,000% since 2016.” — Kevin Trinh (18:07)
• “Passive income is not passively built. It is passive when it’s built.” — Kevin Trinh (35:20)
• “Just remember: build deep, build up.” — Justin Colby (36:15)
• “Eventually… you’re able to get parcels on these, condo mapping, sell it individually.” — Kevin Trinh (28:29)

Segment Timestamps

• ADU Basics & Lot Requirements: 01:14 – 04:24
• Location & Neighborhoods: 03:46 – 04:25
• Where ADUs Are Hot: 04:25 – 07:51
• Permits, Construction Timelines: 05:21 – 06:34
• Business Models: 08:03 – 09:57
• ADU Unit Configurations: 12:33 – 14:24
• Financing and Lending: 15:31 – 17:37
• Costs & Comps: 18:32 – 19:09
• Long-Term Hold Areas: 19:34 – 20:53
• Technical Construction Notes: 22:13 – 23:09; 24:54 – 25:28
• Condo-Mapping Exit Strategy: 27:49 – 29:37
• Scaling & Wisdom: 33:31 – 36:18

Conclusion

This episode is an essential listen for real estate investors looking to unlock a “hidden” vertical with huge upside. Kevin Trinh’s expertise shows not only the practical steps for launching an ADU strategy but also the nuanced thinking behind neighborhood choice, construction, financing, and ultimate monetization—including innovative exits, like selling off individual units as condos. The conversation is candid, practical, and energizing—packed with real numbers, tactical guidance, and honest reflection on the challenges and opportunities of scaling an ADU-focused business.

For anyone interested in learning more, Kevin Trinh’s “ADU Mastermind” is available for deeper insights and community support.

Connect with Kevin Trinh on Instagram: @thekevintrinh
Stay tuned for future episodes of The Science of Flipping for more high-level real estate insights.