Opinion on options for lot development needed please

3 Replies

Good day everyone. I currently have a single story SFH (1850 sqft) in front of a lot, size 75'x200'. I originally bought it to split into 2 lots (front 53x100, a 22' driveway to back lot with 75'x100'). My intention was to major remodel the front house to be about 3000 sqft, 2 stories. Once done, I'd sell it & get the money to build the 2nd house in the back with similar or bigger size.

This is in a better-than-average neighborhood of the city in Northern CA. On this street, there's mixed types of properties, ranging from MF to custom SFH of 3000-4000 sqft or similar. Comp for a new house is probably $400-$450, depending on quality of course.

Right now, there's about 100 brand new 3 level SFH development going on right in its back yard, ranging from 1700-2100 sqft. These sells for around $400/sqft. And, my lot is zoned medium density. I can build a max of 5 townhouses.

So I'm thinking: if I build 2 big custom homes, the value I'm asking maybe too much for people wanting to pay for around this neighborhood.  I've never done MF development before so I'm not sure on the total cost and time it actually takes.  But based on some estimates from city planning department and cost research, it could be a lengthy and costly process.  

If you've done it before (specially in the Bay Area), please shed some light on detail cost and time line please.

Now, I think I have 3 options:

1) Originally plan: split into 2 lots, 

 - remodel front house to build a big house (~3000 sqft) for front lot 

 - build new one (~3000-3500 sqft) in back lot

2) Split into 2 lots (same as option 1):

- build a smaller house (~1800-2200 sqft); build an ADU ~700 sqft for front lot

- build 3 townhouses in the back lot ranging from 1500-2000 sqft

3) Keep the whole lot, build 5 town houses ranging from 1700-2200 sqft 

I'm leaning toward option 2 for a couple of reasons:

- Quicker turn around: much quicker to get plans drawn up & get building permits for

- Can split into 2 phases: front lot, back lot

- Lower cost for phase one (front lot) 

- Easier to sell

- If I want to hold it instead of sell, 2 types of properties (SFH & town houses) is probably more preferable than just 5 town houses.

Opinion, advice are welcome please!



It all comes down to the numbers and ROI over time. You need to run the numbers for each option and divide the returns over time which is the IRR. That will give you the answer. That's the beauty of numbers it takes all the emotion and guesswork out of the equation.

I'd love to hear more about what the lot-split process is looking like for you. 

I agree with Greg (run the numbers). Did you look into splitting it into, say, 4-8 lots? I've seen people take a single Oakland lot, put a driveway up the center, put in 4-8 townhomes (each generally 2 story on top of a garage) on it, and sell off each home. That might be a bit too dense for Hayward, though, I don't know.

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So glad I came across this post. Sorry I can’t be of much help but I’ve had this exact idea for out this way in the North Bay

I’ll be following this thread to learn and be inspired