Rental property with both attached ADU and detached ADU

7 Replies

Hi BP community,

I wanted to check in and see if anyone has experience in this area. We have a single family home that's been modified and now has an attached companion unit with its own kitchenette, bathroom and side entrance. So that's 2 units. On top of that, there's a brand new 2 bed 2 bath detached ADU in the back. So we're at 3 units now. My two questions are this.

1. Is it possible to split the cable service into 3 separate accounts, since there could be 3 separate families on site?  I've called the cable companies and they can create the accounts as Unit A, B and C.  But our electrician is telling us there's usually only 2 separate cable drops to the house, which implies it may be difficult to have a 3rd provider.

2. The second question. Is this just too troublesome to manage?  Maybe it's better to keep as 2 units.

Any input is appreciated.  Thanks.

Sounds to me like you have a primary dwelling, an attached JADU and a detached ADU. This is all generally ok from a zoning perspective and as of Jan 1, 2020 the owner occupied exemption kicked in so you likely don't have a problem legally in renting all three units.

Not sure on your cable question but does each unit have separate utility meters so each unit can get it's own bill? How are you thinking about that?

I'd love to hear more about what kind of returns you would expect from renting all three units. I'm guessing it's great and something we'll see more of as ADU's & JADU's become a lot more popular.

(Full disclosure, I'm in the ADU business)

That's correct, an attached JADU and detached ADU. Each unit does not have a separate utility meter, so the plan is to charge a set fee to each tenant for water, electricity and gas. We are putting solar on the ADU, which should offset most of the electrical use. I started helping with this project midstream, so some decisions I'll have to live with. For example, not having separate meters. I'm not even sure that was an option, or maybe it was just too expensive.

The part that makes this slightly more complicated is converting the residence from single family to 3 units.  There's a lot to consider with the possibility of 3 families living.  I'd be happy to share as we make more progress.  It certainly is one investment option for San Diego, since the cost of housing here has gotten a little out of hand.

As far as return on investment, I'm working on this with a family member, so he may decide to live in one of the three units or rent out all of them. Here's a breakdown.

Main house - 850 sqft 2 bed 1 bath w/garage and nice size front and back yard.
Detached ADU - 950 sqft 2 bed 2 bath, shared driveway parking, large upper section of back yard.
Attached JADU - 220 sqft 1 bed 1 bath, kitchenette, separate driveway, side and back yard.

I would say a rough guess on rent is

Main house: $2200/month
Detached ADU: $2400/month
Attached JADU: $1000/month

But we'll have to see.

A property in San Diego with a JADU requires owner occupancy. The state rules that do not require owner occupancy does not apply to JADUs. If you only had an ADU then owner occupancy would not be required.

Good luck

@Dan Heuschele is correct - if you attempt to permit the JADU right now, the City of SD will require a deed restriction placed on your property requiring owner occupancy.

As a general answer to @Matt L. Question #1: the cable company will only have 1 drop to the property and will split the signal for each unit.  They're happy to take 3x the revenue for the same service.  That's not an issue to do.  I've done it many times over the past 10 years (the strategy you're describing is exactly what I did from 2010-2019).

On Question #2: you mean too much trouble to build the 3rd unit?  That's totally your own call.  I wouldn't personally want to live in a home with 2 unrelated people in the other two units.  But, maybe you don't mind.  It's certainly an income-generating endeavor.  Don't underestimate the soft and hard costs of new construction (whether site built with sticks, component built, or manufactured) -- it's expensive.  

@Dan Heuschele Thanks Dan, I thought there was a rule like that requiring owner occupancy.  There was a last minute change to create a JADU as well, so I'll have to make sure all the necessary permits have been submitted.

@Justin R. Thanks for the tip. I'm not sure he's aware of the deed restriction.

As for #2, I was referring to managing a property with three tenants, but it looks like that's not an option. So he would be living in the main house and managing tenants in the JADU and ADU. I did also mention that I wouldn't want to live that close to tenants either. I think he will grow tired of it and eventually rent the main house and JADU as one rental.