Oakland, CA ADU Conversion

2 Replies

I am looking at a few properties in Oakland, CA that have either an illegal basement unit or guest house. I know the ADU laws are getting more relaxed here but I want to know if it would be too large of a risk to buy a SFR in which the numbers would only work IF I could get the additional unit legalized and rented out. Is there somebody I can consult who would be able to look at the property and tell me if it would be able to be legally converted? Would I be able to make an offer contingent on approval for ADU conversion? Is there any reason why a unit which meets all requirements WOULD NOT be able to get legally converted? Any thoughts on this would be greatly appreciated.

Hi Desmond, this is a great question. There are people who are specializing in ADU conversation and I would be happy to refer a few to you if you shoot me a DM. They will likely charge for their time to come out and walk through the property, however. Tradespeople are really in demand (especially in the ADU space) and you either have to call in favors or pay them.

As far as writing an offer subject to ADU approval, unfortunately, this won't work. Because you have not taken title to the property, you cannot pull permits or do any work since you don't yet own it. And in fact, if you go to the city and tell them there is an illegally converted space in a given property, you have effectively turned them in for a violation and have damaged the Seller's ability to sell the property and they could come to you looking for damages.

My suggestion is to hire an expert to walk the property with you and do as much research at the city level without disclosing the address or the existence of any work, and then move forward with an offer based on that. Much like in SF, we transact "as-is" so anything disclosed upfront is effectively taken off the table from a negotiation standpoint. 

I hope this helps. 

@Desmond Bucky depends on your risk appetite and potential income of ADUs can't really use it as a contingency. Assuming you are purchasing for sole purpose of renting it out, adding an ADU would help your long term cash flow situation.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here