Calif’s new granny unit law & ADU flips: is CA the next Portland?

56 Replies

Hey Y'all, do you know if an ADU can be added to an existing duplex? I've got a duplex in Oakland that I owner occupy. Could I add an ADU to it?

@Daniel Gonzalez,

@Calvin Kwan is correct. 

The Accessory Dwelling Unit (ADU) guidelines are for single family homes - not duplexes. If you want to add another unit to a duplex, you need to have 3-unit zoning or get a variance (can be very difficult) Here is the language from the city as of May 12, 2017:

"A "Secondary unit" (also known as “accessory dwelling unit,” “in-law unit”, or “granny flat”) is an attached or detached accessory dwelling unit that is located on the same lot as an existing One-Family Dwelling facility..."

http://www2.oaklandnet.com/oakca1/groups/ceda/docu...

I looked into it for the duplex I have in West Oakland. Let me know if you find anything different.. 

Variances are also extremely difficult to get and are only granted in extraordinary circumstances. i called the city not too long ago to see if I can convert my duplex to a triplex. City basically said don't bother. I don't have the lot size required, even though I was just adding an additional front door and wall to divide a unit. 

@Calvin Kwan that's crazy! My lot in Fruitvale is just short of 7,500 feet. I think I need an additional 30 feet to meet the zoning requirements to add a unit to my duplex. That's a bummer man!

You might want to try to call the city and explain you are just shy of the requirement.   They might give you a different answer.  Let us know us!

Originally posted by @Daniel Gonzalez:

Hey Y'all, do you know if an ADU can be added to an existing duplex? I've got a duplex in Oakland that I owner occupy. Could I add an ADU to it?

 It'll screw with your future buyer's ability to get a normal mortgage, which in turn can ding value.

I'd suggest looking into zoning/permits to make it a 3-unit property. 

Also, please call me when you have a moment. 

I was super excited about this new ADU law but I just got my city's adoption of the law and it is NOT friendly to ADUs. I live in Long Beach and the city requires either the primary dwelling or ADU be owner-occupied and it must be a recorded covenant attached to the property. The city requires a title report showing the covenant prior to issuing a building permit. The way I interpret this is the primary dwelling AND ADU can never both become rental units at the same time. Very restrictive and not good for future value of the property.

Not quite sure why the specifically included historic districts. This would seem to have a negative impact on historic districts by increasing density and adversely affecting parking (many historic homes, at least in my area, do not have adequate parking/garages to begin with -- this will just exacerbate the issue, putting more cars on the street).

We're also in the unique position of having a University within the community that currently only houses approximately 40% of their students, putting tremendous pressure on the local, mostly historic, housing stock. Developers, out-of-area owners (parents of students) and homeowners without the best interests of the community in mind will now be free to construct ADUs without an incremental off-street parking spot, putting further pressure on the already slim available parking. 

Historic districts should have been exempt from this new State ADU law.

I live in Southern California and have a feeling adding ADU's will be huge. For the people in Portland or other area's that have already implemented the ADU in SFR what effects have you seen in your area?

Have you seen values increase because of the potentially higher rental income?

Or are there unintended consequences that doesnt meet the eye?

I plan on adding ADU's to some of my rentals.

Originally posted by @Joel Berman :

I live in Southern California and have a feeling adding ADU's will be huge. For the people in Portland or other area's that have already implemented the ADU in SFR what effects have you seen in your area?

Have you seen values increase because of the potentially higher rental income?

Or are there unintended consequences that doesnt meet the eye?

I plan on adding ADU's to some of my rentals.

You can only add a ADU if you live there. So basic if you living there get a permit add the adu and the rent both out when it is done.

They wont issue you one if you don't live there.

Has anyone added a separate electric, gas and water meter to the ADU and if so how much did it cost from each utility company? I heard it is expensive but have not been able to get any firm numbers

Does anyone know how this impacts an existing duplex?  I am looking into making my second unit bigger.  The second unit is permitted. There is a third unit that is not permitted (how I bought it) that I would like to tack onto the second unit, with permits of course.  Does this apply and would it prevent me from having to add another available parking spot?  Thanks!

I just got home from a REI club meeting and the topic of ADUs came up so naturally my mind started going. For a flip or buy and hold that is on the margin especially where prices are where they are at, quick math suggests:

1000 square feet ADU @$150 / square foot = $150000 construction costs. Add in design and permit fees and you're still potentially under $200k.

With that you essentially have another house to rent out.  The only way this doesn't seem to be a huge win for the investment community is in the case of the above where one of the units must be owner occupied.

As a designer, this has huge interest for me.

I have submitted a plan for an ADU in San Mateo. Got the comments back. Planning is fine, a few issues to address with building and hopefully that will be it.

Maximum 640 sf in San Mateo.

Has anyone found any jumbo or Non-QM lenders (banks, not brokers) that will lend on an SFR with legally permitted ADU in California? Fingers crossed they will allow appraisers to list 1-2 comps of similar SFR with legally permitted ADU close by so we get the same price per sq. foot on the ADU sq. footage as we got on the main SFR home. Anyone getting lenders to give you the same price per sq. foot as the main house per sq. foot on appraisals? If yes, were they stick build ADUs or modular construction?

@Christian Kurt - I life in a SFR + ADU in San Carlos and I was not given the same cost per sq ft on appraisals as comparable SFR. It was appraised at about 15% less on a per sq. ft. basis.

My parents live in a SFR + ADU in Fremont. Fremont also requires the owner to live in either the Main home or ADU, but they do not explicitly state that if the owners were to move out, they would be prohibited from renting out both units.

Does anyone know if the requirement of living in either the SFR or ADU implies that you can not move out and rent out both units? If you have lived in either unit for a period of time, does this get around it or is it indefinite?

Thanks!

Hello from my understanding, you only need to live there when getting the plans and permits. So if you werent living in the main house. They would not approved the ADU

Once it is built you can rent out it as two units.

Unlike legislation in years past these laws are a requirement for local cities to comply with. Based on what I have read in the local paper it appears that local communities have some leeway with how it is implemented but not much. 

Though I think properties with ADU on them will see an increase in appreciation I do not think it will have much of an impact on the local housing market because:

1) Not every home has space for an ADU

2) Not every home with the space wants an ADU

3) Not every owner who wants an ADU can afford to build one

If ADU took off it would only help a small demographic of the housing market (i.e. those with smaller households [1 to 3 people] ). It wouldn't solve the issues for larger/multi-generational households who need affordable housing.