How Real Estate Investors Use ADUs to Double or Triple Rental Income Without Buying Another Property

Brad Jones (00:00)
What that means is an eight thousand square foot lot zoned R-2, which is a very common zone here in central Tucson, you could build—and three years ago, you could build one house.

An 8,500 square foot lot, you could build one house. Then they rolled out the middle housing initiative. Now you can build four houses. But in addition to that, they reduced the minimum square footage requirement to 4,000. So what that means is that client could split that lot, have two 4,250 square foot lots, and build four 750 square foot homes on each of them. So you’ve gone from being able to build one house on that property to eight.

Joseph Crooms (02:09)
Hey everyone, welcome to Investor Fuel Real Estate Pros Podcast. And today I am dealing with a gentleman by the name of Brad Jones. Today I’m joined by him. I am your host, Joseph Crooms. I’m looking forward to chatting more with Brad. We had a little conversation during the pre-chat, but he has some terms, a couple of acronyms. So I’m gonna start there. Brad, say hello to everybody.

Brad Jones (02:38)
Good morning, Joseph, and thank you for having me on. I really appreciate the opportunity, sir.

Joseph Crooms (02:42)
It’s my pleasure. I think our listeners are really going to take away something from how you’re approaching business, especially this thing called the ADU. So let’s dive into it. Hey Brad, tell me what ADU stands for.

Brad Jones (02:57)
Great question. Great question. It stands for accessory dwelling unit. A lot of people think it’s auxiliary or ancillary, but it’s accessory dwelling unit. And it really just means a guest house, a casita, a granny flat, something that you would have, a smaller home in your backyard. And the whole reason that they’ve even come up with this term, ADU, is because we are so regional in the terms that we use. Where someone’s using a granny flat or a casita or a guest house, that we needed a term that could be nationally utilized. So if there is governance or there are programs rolled out in the future, they have one term that they can use that covers all of the different parts of the United States.

Joseph Crooms (03:38)
Elaborate a little more. So you’re talking about you have a piece of property and now you have an additional home that you built on the property or you may already have one?

Brad Jones (03:48)
Yeah, traditionally it’s gonna be a detached, although sometimes they are attached, but it would be a fully inclusive home. So, you know, bedroom, bathroom, full kitchen, living space. They typically are gonna run somewhere between five hundred to eight hundred square feet, although we’ve certainly done some that are over a thousand square feet, depending on a couple of things: size of the property, the zoning in that particular area, regulations. I mean, you do have to know what that is in your particular area to know what you can build, but it provides great housing opportunities for, you know, an aging parent who wants to age in place, you know, a what they call a boomerang child or a boomerang kid who’s gone out and they’ve come back and they’re trying to establish themselves, or a great opportunity for rental income.

And especially if you already have a rental property, I can tell you specifically in Tucson, Arizona, every rental property seems like it has another four or five thousand square feet of dirt behind it. And you can just go build one. In fact, they just rolled out the middle housing initiative here in Tucson on January 1st. You can now build four houses on virtually any single family residence in Tucson. So if you’ve got the space, you could build another couple of guest houses behind your existing rental property and triple your rental income.

Joseph Crooms (05:04)
Get into that a little more. Let me ask you a question though. Let me back up a little bit. So for people who may not be familiar with your world, Brad, your niche, give us the short version. What would you tell them in one sentence? What would you tell them about your business?

Brad Jones (05:20)
I would tell them—and usually people are coming to me because they’ve heard something, right? They’ve gotten an idea of what’s out there and they’ll say, “Tell me about this process.” Really, it just comes down to this: The rules across the country have changed and are continuing to change. You can now build additional homes on your property that have a number of different uses. Now, some people may use it as, I mean, pool house—we know about pool houses, those can sometimes be transitioned into an ADU. You may have a storage shed in the back. We can transition those or convert those into an ADU, an additional living space for family, friends, or rental income. And we take care of the entire process: plans, permits, full construction, utility connections. When we’re done, you bring in your family, food, and furniture, and you’re good to go.

Joseph Crooms (06:55)
Brad, do you also find investors to help?

Brad Jones (06:57)
Yes. Yes. I mean, we have—I currently right now I’m building a duplex for an investor who already has a duplex on the property and they’re renting that, and now they’re gonna double that. So they’re gonna go from two units to four. This past year we had another client who had a three bedroom, two bath guest house or home that they were renting, and we built two homes on the back of their property, a two-story and a single-story, both two bedroom, two baths. And again, these people are—they’re doubling and tripling their rental incomes by putting this in place. And it’s half the price of going out and actually buying a property with, you know, a home on it that you’re gonna rent.

Joseph Crooms (07:39)
Let me ask you this question. How long have you been operating? When did you start?

Brad Jones (07:46)
So I started in—technically, I started in June 28th of 2024. And if you’ll allow me to tell a very quick story, I bought into the first and only franchise that built ADUs in the country in June 28th, 2024. On July 31st, that company shut down. Internet went down. They collapsed, and eventually had to file Chapter 11. So I was sitting there having just made this big investment into this business and said, “Now what am I gonna do?” But the good news was in the five weeks that we were in business, I had already had three clients under contract to build these. So I knew the opportunity was a hundred percent there. People needed these, and so we rebranded.

And in September of 2024, we started up again and we’ve sold sixty-five projects. I think we have forty-five completed projects done. We also just got our first commercial project, which is to build twenty-five casitas for a wellness resort down in southern Arizona. So this is a huge opportunity. And even though we’ve only been doing it for right around two years, we’ve had a tremendous amount of success.

Joseph Crooms (09:01)
So now you’re going into your second year. What is your volume or revenue? How does that translate?

Brad Jones (09:07)
Yeah, so we’re probably going to do about twelve to fourteen million dollars in 2026. And we’ll, you know—so I get this question a lot: What’s the average cost of an ADU? Well, there is no average because they just range so dramatically. You could either have a studio, a one bedroom, a two bedroom. But if you were to take a look over the last two years, we’re probably averaging close to around $180,000 to $185,000 per unit. And, you know, our goal ultimately is to try to track right around fifty to sixty units a year. And if we continue to do that, at some point I’m gonna have to seriously look at expanding. But I’m trying to keep it somewhat—I’m the only person that’s selling right now, and that’ll have to change eventually.

Joseph Crooms (09:56)
And that’s a good problem to have. Absolutely. So where would you say your volume was at now?

Brad Jones (10:05)
Let’s see. In terms—well, I mean, as an example, we sold six projects in July. Right. So July was a good month. We’re, you know, we’re probably going to track to be doing around fifty this year, or maybe getting closer to sixty. But the opportunity—as I do more and more of these types of things, Joseph, I feel like we’re gonna get our name out there more and it’s gonna—it’s really going to blow up. The education is the most important piece. So many people don’t know what they can do, had no idea they could do anything. They’re very fearful. I mean, if you’re gonna make a $175,000, $180,000 decision, you don’t want to make a mistake here, right? So fear, uncertainty, and doubt—that is my goal is to remove all of that and make sure that these people are making an informed and confident decision.

Joseph Crooms (11:29)
So at this level now, how much are you making a month? What would you say your revenue—

Brad Jones (11:36)
We did—I think we did 1.1 million last month in July, and I think that probably tracks for the year. We’ve been doing right around 1 to 1.2 million a month in 2026.

Joseph Crooms (11:47)
Makes sense. Sounds good. So now, why Arizona? But I think our audience needs to hear a little more. I heard it, but I wanna see, why did you go into Arizona?

Brad Jones (12:01)
Yeah. Well, okay, there’s a couple of pieces here. First and foremost, I am a Wildcat, through and through. I went to the University of Arizona and I love the desert, right? So my career did take me all around the rest of the country, but I knew eventually I wanted to come back and retire here. My parents ended up moving here. My brother lives out here, right? So my parents—my mom is eighty-two. I wanted certainly to be closer to her. And as I started doing the research, when I actually started looking into this, I was gonna do it in Houston. I was living in Houston, Texas at the time. And I don’t know, I had one of those divine intervention moments when someone said in my head, “Why wouldn’t you consider doing it in Tucson?” And then I started researching the opportunities in Tucson. And it’s incredible because you’ve got an aging population here. A lot of retirees go to Arizona, go to Florida, right? So you have an aging population number one. You’ve got a major university with University of Arizona. So there is tons of rental properties around the campus where people can leverage a solution like this. And housing is a major issue in Arizona, but certainly in Tucson. And so the rules were starting to change to really make this a lot easier to do and continue to change. And so those three things coming together really made Tucson an attractive option.

Joseph Crooms (13:23)
Brad, let me ask you this. So say you have a home on the property, you have space for three, ’cause you said there’s so much there. How long would it take to build a house? How long would the whole deal take?

Brad Jones (13:36)
Takes about six months. It takes us 90 days to get a permit, and we’ll build the house in 90 days. If you were to go look at probably the last ten that we’ve completed, we’re somewhere between five and a half and six and a half months. Really, the only thing that’s a delay in that is gonna be on the permitting side. And it could be because you live in a historic district and you’ve got to go through an architectural review, or, you know, you’re in a hillside zone or you’re in a floodplain and you’ve got to go through some additional exercises to get the permit, which may include, “Hey, we need to build the pad up,” or, “You need to be concerned about this riparian habitat that’s protected Arizona habitat. If you’re going to take something out, you got to put it back.” So those types of things can potentially delay it, but it should be right around six months.

Joseph Crooms (14:22)
And how do you—so you said your market could be seniors, definitely colleges, and just the general population. Can you tell me, how do you go about getting the word out?

Brad Jones (15:17)
Well, I will tell you, Meta is my friend. I do a lot of Facebook and Instagram marketing. I have a YouTube channel. I do a lot of presentations with real estate companies and realtors. Because I’ll tell you, realtors are getting requests from their clients: “I want a house with a guest house.” They are already planning to put someone in that guest house.

Most of the time—and I would say 75% to 80%, Joseph, of my clients are someone who’s putting their aging parent in a house, or that aging parent’s putting themselves in a house. They’re buying one, they’re gonna pay for it, they’re gonna sell their house, they’re gonna pay for one to be built on their children’s property, and they’re gonna live back there so that they can be close to them and they can, you know, they can have that assistance. But that’s the big opportunity. So these realtors are getting calls from people saying, “I need a house with a guest house.” And after they’ve looked at the limited number of homes that have that, the realtor will eventually say, “Why don’t you do this? Instead of trying to find a house that has a guest house, go find the house you want and we’ll build a guest house back there.” And so we do get a fair amount of our opportunities from realtors as well.

Joseph Crooms (16:31)
So—and I’m trying to ask very relevant questions, Brad, because I love what you’re saying. What is your next goal? What do you focus on, or scaling or solving next? What’s the next real goal?

Brad Jones (16:44)
Yeah, so last year I started a branch, an arm of our organization called Tiny Villages of Tucson. And the intent of that—that’s a non-profit 501(c)(3). We’ve already got our certification status and all of that. But the intent of that is to take this to a larger scale, right? Instead of just building a tiny home, can I buy a property or a parcel and put multiple small homes on it? Now, for now, with the zoning being what it is, I could potentially put four homes in the city of Tucson on any given property. But I can’t break those up and sell them individually to people. What I can do though is I can put those under a community land trust program, which is what the 501(c)(3) would do. And similar to you buying a mobile home or buying a condo, someone can buy that house, not own the land—they pay a land lease—but they buy that house. This is going to be a program that would be specifically dedicated to lower income homes. So you’d have to qualify. But we’ll be able to give people the opportunity to potentially buy their first home for 30 or 40% less than a typical three bedroom, two bath might cost, and gives them the opportunity to get their leg up, get established, be able to be a legitimate mortgage-paying person, and then they can move into something bigger down the road.

So whether it be for that or even this middle housing allowing us to—I think there’s gonna be a ton of investors that are gonna come running into Tucson knowing this. They’re gonna buy distressed properties, they’re either gonna fix up that house or demolish it, and they’re gonna put four homes on there and they’re gonna rent them all. And we wanna again—we wanna be the builder they go to when they see an opportunity like that. And knowing that we handle the whole process from start to finish, I think will be a big relief for people. You know, a lot of these investors, they bought that property because their kid fifteen years ago went to the U of A and they said, “You know what? I’m gonna buy it,” and now it’s just sitting out there. They’re never there. They don’t come to Tucson very often. And so we can handle all that for them here.

Joseph Crooms (18:49)
Brad, talk about your business model. Talk about the businesses that are contained in your business now.

Brad Jones (18:57)
Yeah, so here’s gonna be the interesting part, Joseph. I didn’t tell you this in the prep, this is a surprise. Okay, I have one employee. One. And he is my director of pre-construction and operations. I basically handle the clients up until the point where they say, “Yes, I’m gonna do it.” He takes over from there and makes sure that the designs are set up properly, that they’ve got all of their finishes selected. He gets them through permitting. Once the permitting’s done, it goes to my general contractor. Now, my general contractor, I wish he would come on board with me, but he’s like, “I want to keep my own business.” So he’s separate, but we send all of our business to him and he builds the house. So how do we run all of that internally? I have an outsourced marketing team that takes care of all of our Meta and Google advertising, et cetera. I have an outsourced finance team, a fractional controller, if you will, that handles all of our finances and pays all of the bills, et cetera. And I’ve just got some powerful software systems. And again, when I talk about being able to—when I say I think we’ve cracked the code, we have created a system through third-party partners and software that allows us to do this kind of business, this kind of revenue and productivity with a very, very lean organization.

Joseph Crooms (20:17)
Thanks for sharing that, Brad. Now I know a lot of people listening are early in their journey and looking to level up and think that they’ll benefit from hearing this. When it comes to building relationships and growing, you talked about it some, but can you tell me what’s made the biggest difference for you?

Brad Jones (20:35)
Well, I will say, although not in construction, I’ve got thirty years of sales experience, executive leadership, management. So I know the importance of building quality relationships with my clients. You have to listen, right? And if you can listen more than you talk, you’re going to get a whole lot more out of that conversation with a potential family or a loved one that they’re trying to take care of. But the other thing is, when I did this, I made a commitment to myself: I will be a subject matter expert in this in a very, very short period of time. So I have immersed myself in studying and understanding the concepts around ADUs, around construction, around marketing. And when I sit down with a client and I’m listening to their story, I’m going to make a recommendation. This is not like I’m trying to necessarily sell an ADU when I sit down with a customer. What I’m trying to determine is, is this a go or no-go situation for you? Is this the right decision for you? Because for some people it’s not, right? Maybe the property won’t allow it, or it won’t give them—they’re not allowed to do exactly what they want. Or the costs are going to be significant because, you know, they’re not on city sewer. They are on a septic tank and they’re going to have to spend $15,000 just to put another septic tank in.

I’m trying to educate them on everything that I can so that they feel like they’re making an informed decision. And part of that relationship building is the key. I mean, when I leave a house or I’ve completed presenting an estimate on something, if they’re going to move forward, they’re going to move forward with Tiny Homes of Tucson.

Joseph Crooms (22:16)
Brad, let me ask you this one question too. It just popped in my head as you were talking. What about if the properties that have all this land are adjacent to each other? What if you thought with your 501(c)(3), could you do something with that?

Brad Jones (22:32)
You can. I mean, if you have two properties, you could still—and in the city of Tucson specifically, you can still build four on each of those properties. And here’s another thing that’s interesting, Joseph: when they rolled this program out, they also reduced the minimum square footage for the zone.

What that means is an eight thousand square foot lot zoned R-2, which is a very common zone here in central Tucson, you could build—and three years ago, you could build one house.

An 8,500 square foot lot, you could build one house. Then they rolled out the middle housing initiative. Now you can build four houses. But in addition to that, they reduced the minimum square footage requirement to 4,000. So what that means is that client could split that lot, have two 4,250 square foot lots, and build four 750 square foot homes on each of them. So you’ve gone from being able to build one house on that property to eight.

Joseph Crooms (23:27)
And that’s your community. That’s your investment community that you sort of had the brainstorm on, huh?

Brad Jones (23:33)
Yeah, I mean, I don’t have access to MLS, but I know realtors who do. And I tell them all the time, “Pull this stat: How many R2 zoned homes are for sale that are between eight thousand and ten thousand square feet? Go find those. Those properties can be split. They probably have one house on it now, and we could build eight on there.”

Joseph Crooms (23:52)
Brad, thank you, man. I wish we had much more time. Relationships are everything in this space and it seems like you are definitely on the right track. All right, before we wrap up, if someone wanted to reach out to you, Brad, connect with you, maybe collaborate, learn more about what you’re doing, what’s the best way to reach out to you? And take your time and repeat it twice.

Brad Jones (24:13)
Okay, you got it. So you can certainly email me, and it’s a very simple email: It’s [email protected]. B-R-A-D at T-H-T-U-C-S-O-N dot com is my email. You can certainly go to our website and get a hold of me there, which is tinyhomesoftucson.com. And we’re also on Instagram or Facebook at Tiny Homes of Tucson.

Joseph Crooms (24:36)
Give it to us one more time, Brad. Somebody was looking for a pen, trying to get all that information.

Brad Jones (24:40)
You got it. You got it. Okay. So www.tinyhomesoftucson.com, and at tinyhomesoftucson.com or @tinyhomesoftucson, excuse me, on Instagram and Facebook. We also have a YouTube channel. You can grab that from the tinyhomesoftucson.com website. A lot of cool content on there, but a bunch of new stuff coming out.

Joseph Crooms (25:04)
Perfect. Well, listen, I appreciate your time, your story, and your perspective, and your brain idea. Thank God the light bulb popped on, and continue to move forward, my friend. We need more people in spaces who are doing it the right way. Thanks again for being here, Brad. Really—

Brad Jones (25:23)
Thank you, Joseph. I really appreciate the opportunity. You have a great day, sir.

Joseph Crooms (25:27)
No, we still got you, because you gotta say bye. For those of you tuning in, I know you got some value from this. Make sure you subscribe. We got some more conversations coming from operators just like Brad Jones, talking about ADUs. Call him to find out more what that’s all about, who are out there doing real business, helping real communities, and helping real people. We’ll see you on the next episode of Investor Fuel Real Estate Pros Podcast. Brad, tell everybody, see them later.

Brad Jones (26:01)
Thank you very much. Appreciate the opportunity. Everybody have a great day.