SFH with ADU vs SB-9 lot split
I have a SFH on a 7,500sqft lot. I'm looking to add a 1,000sqft ADU on the property or try to split the lot through SB-9 and have two 1,200sqft homes on 3,500sqft lots.
I'm unsure if I'll be able to split the lot via SB-9 but I'm curious how much more of a return it would be compared to one property with an ADU.
Does anyone have an insight or experience with this?
@Desmond Price I have a client that has recently done this! I would be happy to connect you too so you can ask any questions you may have to some one actively going through it!
Pros and cons to either, but if you can split the lot, I imagine you will eventually be able to sell each house individually for more than you would have been able to sell one house with an ADU.
Pros to ADU is that you can connect into the same utilities as the front house.
Con with splitting the lot is you will need to spend a ton of money bringing in new utilities to the separate address.
Typically, you can sell two separate smaller houses for a higher dollar per sq. ft. than a single house of the same size or a house with an ADU of the same size. For example, you may be able to sell off the back house for $500,000 and the front house for $600,000 if the lot is split, but maybe you can only sell a house with an ADU for $900,000. Do your research and see what comps in the area are telling you.
Agree SB-9 will generate more value as 2 lots than 1 lot with multiple ADUs. The minimum lot size under SB-9 is only 1200 sq ft which is much smaller than local zoning would normally allow in CA.
Keep in mind SB-9 currently has a 3-year owner occupancy requirement. Eg you promise you will occupy the property as your primary residence for 3 years after the split is complete. Unsure how strict enforcement of this is, and many hypothesize this requirement will be loosened over time, but something to keep in mind.
Quote from @Nicholas Coulter:
@Desmond Price I have a client that has recently done this! I would be happy to connect you too so you can ask any questions you may have to some one actively going through it!
Hi, I am also thinking about splitting my lot and would really appreciate if you could share any info that you have (particularly regarding property taxes, increased utility costs etc).
I'd love to hear from someone who has actually split a lot under SB9. I've heard so many people who "almost" did it but decided against it for one reason or another. It seems like there are very few who have actually done it.