Build an ADU or subdivide property to build a 2nd home?

Question

Hi All -

The home I live in is on a 10K sq ft lot in a suburban LA neighborhood around 45 mins north from Santa Monica. There used to be two homes on the lot. I was told that a previous owner had combined the two lots many years ago for some reason. I looked at an old parcel map of the neighborhood in 1986 and indeed there are two separate lots of land. The title policy of the home specifies that I am the owner of the two lots.

The first house on the next street valued at $650K (2bed/2 bath & 1,400 sq ft) is a good proxy of what I can build with the land area that I have given if there was a home there, it would also be the first home my the street. The empty land to the side of my house has enough room to build a 3 bed 2 bath home.

I am now deciding whether to build an ADU or a separate home entirely.

ADUs in my city can only be 1,000sq ft and single story. If I were to subdivide the land, then I could build a two story home, which makes better use of the land, could garner more rental income, and if I were to ever sell, I can sell one of the homes at a time. If I build an ADU, both the main home and ADU are required to be sold together.

If a build a 3 bed 2 bath ADU, it will cost me ~$300K and I don't think my home value would go up by ~$300K. On the other hand, if I build a 3 bed 2 bath separate home, it might cost ~$350K to $400K. If I was looking to buy an equivalent 3 bed 2 bath home in my neighborhood, it would cost between $650K-$800K.

I am leaning towards subdividing the land. The goal is to eventually rent out both the main home and the new home that would be built. Anything I am overlooking?

• I know that once I subdivide the land, both lots and any structures will need to be brought up to the current laws/requirements.
• The lot where the new home would go has two lateral sewer lines already. Don't know if they are functioning yet
• I already have a land survey of the area and no easements that are indicating it would not be possible to build a second home
• No oak trees in the side yard lol
• There's a strong rental and buyer demand in the area. 5 homes in the neighborhood were on the market recently for a few weeks before they sold.

Jason Hsiao · Answer

Just randomly came across this, might be too late @Ronak Patel but if your title and legal description says you own two lots you might NOT need to subdivide it; it's already done for you.

ADU you can get it permitted and built quicker, but I don't think it'll add to the exit value as much since most appraisers and market resale is not treating it at the same dollar per sqft as regular SFH (but it's pretty close in some markets I've seen like in Long Beach).

4,000sf lot is still manageable. What's the zoning here or FAR that's allowed? Even at a somewhat typical 0.35 FAR that's a 1400sf very acceptable right around the average home sf.

Happy to take another look at your title or mapping etc if it's not too late

Matthew Forrest · Answer

I also vote for two homes, and two ADUs!

Ronak Patel · Answer

@Matthew Forrest currently in the design/architecture phase! Hope to start building sometime this summer. Given interest rates are low, will be doing a cash out refi on the main home to fund the cost of the ADU, which I suspect will cost ~$200KK for a 2 bed 2 bath.

Ronak Patel · Answer

Decided to go with detached ADU option since I need at least 6,000 to build a separate home. If I were to subdivide the lot, I'd only have around 4,000 sq ft

Chen Zhou · Answer

I vote for 2 homes

Kellan Martz · Answer

@Ronak Patel How is the process going for you? I just toured a 2 story ADU in Studio City this morning. Loving the growth of ADUs being built (finally).

Matthew Forrest · Answer

@Ronak Patel Awesome! When do you break ground on the new ADU?

Jordan Oborn · Answer

Ronak, did you end up deciding what to do with your property or are you still feeling it out and deciding what option might be best? Looking at similar situations/properties in LA and would love to hear what you decided.

Ronak Patel · Answer

I was looking into the zoning map and it looks like the minimum lot area per dwelling unit needs to be Six thousand (6,000) square feet in the zone I am located in. This may be a deal breaker for a separate home. The entire land area for the 2 lots is only 10K sq ft.

Ronak Patel · Answer

Thanks Chen and Matthew! Any experience with subdividing land and what I should be on the look out for?

Anyone see merit in just going with the ADU? It would be less time intensive and cost a little less, but the upside to the separate home is far greater in my view.

@Matthew If only there was enough room for the ADUs as well :)

Build an ADU or subdivide property to build a 2nd home?

Build an ADU or subdivide property to build a 2nd home?

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