Los Angeles, CA · Member since 2017 · 78 posts · 82 votes
8y
Hey Steve!
I just finished one. Converted my garage to a 1bed 1bath in Atwater and the new tenant is signing the lease today.
A lot to type out for the whole process, happy to grab a coffee and go over all of it with you. I think there's a lot of income to be made by doing it in LA.
I did the design work and had a structural engineer draw up those plans. I went a little overboard vaulting the ceilings, adding sqft and some extras but I think the area calls for it and it makes a smaller space feel huge.
Specific to the ADU......
Property is on flat land so no hillside regs.
It's within .5 miles of public transportation so we're able to convert the garage and not have to put in covered parking.
Design was a little tricky since the original structure is non-conforming to the setbacks.
A huge issue people have been running into is changing more than 50% of the structure. The city will call it all new and then everything would have to be within the newer setback regs.
Gas and power are on new meters. Water is subbed. (utilities were the longest process so jump on them early)
Los Angeles, CA · Member since 2017 · 78 posts · 82 votes
8y
Hey Steve!
I just finished one. Converted my garage to a 1bed 1bath in Atwater and the new tenant is signing the lease today.
A lot to type out for the whole process, happy to grab a coffee and go over all of it with you. I think there's a lot of income to be made by doing it in LA.
I did the design work and had a structural engineer draw up those plans. I went a little overboard vaulting the ceilings, adding sqft and some extras but I think the area calls for it and it makes a smaller space feel huge.
Specific to the ADU......
Property is on flat land so no hillside regs.
It's within .5 miles of public transportation so we're able to convert the garage and not have to put in covered parking.
Design was a little tricky since the original structure is non-conforming to the setbacks.
A huge issue people have been running into is changing more than 50% of the structure. The city will call it all new and then everything would have to be within the newer setback regs.
Gas and power are on new meters. Water is subbed. (utilities were the longest process so jump on them early)
I just finished one. Converted my garage to a 1bed 1bath in Atwater and the new tenant is signing the lease today.
A lot to type out for the whole process, happy to grab a coffee and go over all of it with you. I think there's a lot of income to be made by doing it in LA.
I did the design work and had a structural engineer draw up those plans. I went a little overboard vaulting the ceilings, adding sqft and some extras but I think the area calls for it and it makes a smaller space feel huge.
Specific to the ADU......
Property is on flat land so no hillside regs.
It's within .5 miles of public transportation so we're able to convert the garage and not have to put in covered parking.
Design was a little tricky since the original structure is non-conforming to the setbacks.
A huge issue people have been running into is changing more than 50% of the structure. The city will call it all new and then everything would have to be within the newer setback regs.
Gas and power are on new meters. Water is subbed. (utilities were the longest process so jump on them early)
Rental Property Investor · Phoenix, AZ · Member since 2016 · 553 posts · 314 votes
8y
Andrew, what was the utility process like? Did you have to add new meters? Was getting the side sewer in the ground a challenge? We're there fees to hook up?
@Seth Borman My contractor warned me about the utilities so I called them from the start.
New meter for gas and for power. Sub meter for the water that will go to the bill on the main house but be split out.
Power wasn't bad. We were able to put a new meter next to the old one and they paralleled the lines so there was no new drop.
The gas company is insanely backed up. Under staffed I've been told. The field guy has been great it's just been a long process of contracts, right of ways, knowing all the BTUs between both houses to see if we needed to run a new, larger line from the street. (fortunately we didn't) But of course it's a process of getting final released and then the utilities to finish.
Sewer wasn't bad. I had replaced the main line to the street years ago and knew were the cleanout was in the driveway and could connect the two. We had enough slope to make the run work. Having a cut lines in the driveway isn't ideal but it doesn't bother me a ton. We pulled out some of the old driveway that lead up to the garage so there was more yard so that helped.
There was a fee for the sewer because of the new address but I can't remember how much it was.....but there are fees for everything in LA.
@Seth Borman My contractor warned me about the utilities so I called them from the start.
New meter for gas and for power. Sub meter for the water that will go to the bill on the main house but be split out.
Power wasn't bad. We were able to put a new meter next to the old one and they paralleled the lines so there was no new drop.
The gas company is insanely backed up. Under staffed I've been told. The field guy has been great it's just been a long process of contracts, right of ways, knowing all the BTUs between both houses to see if we needed to run a new, larger line from the street. (fortunately we didn't) But of course it's a process of getting final released and then the utilities to finish.
Sewer wasn't bad. I had replaced the main line to the street years ago and knew were the cleanout was in the driveway and could connect the two. We had enough slope to make the run work. Having a cut lines in the driveway isn't ideal but it doesn't bother me a ton. We pulled out some of the old driveway that lead up to the garage so there was more yard so that helped.
There was a fee for the sewer because of the new address but I can't remember how much it was.....but there are fees for everything in LA.
Awesome work Andrew!
If you wouldn’t mind, what was the total cost of the conversion and what are you expecting to get in rent?
Rental Property Investor · Los Angeles, CA · Member since 2015 · 32 posts · 18 votes
8y
Great looking work @Andy Brohard. I'm also renovating 1 bed/1 bath units in Atwater Village. How are you going about submetering the water on one main line? Are you just putting meters to read the usage then billing back the tenant?
Van Nuys, CA · Member since 2018 · 14 posts · 27 votes
8y
There are about 12-14 city inspections (86 steps) plus two from LAH you will require passing in order for you to get your Occupancy slip and second address slip.
Under A.B.2299 / S.B.1069 you can convert your garage into a second unit but it must include a full kitchen and bathroom plus it must meet all 2017 Building CODE! if you want to build a guest home it must also meet 2017 building code but it can't be rented out!
To convert your garage into a granny flat, ADU, or Second unit it cost about $75-$120K if you add up 24' foundation, retrofit and rebar, Full Bathroom, Full Kitchen, Insulation, Framing of Interior walls, 5 Windows, Electric meter, Plumbing, Interior flooring, lighting fixture (title 24), and Workers.<--- I have a team of 33 workers finishing 2 this month. Feb we should be done with 4 and about 30 plans getting approved.
A little background I'm a project manager of " don't know if I'm allowed to say' and we have built over 78 Second units in Los Angeles City mostly the Valley so we have plenty of experience working with City inspectors not to mention our offices are right across the street from LADBS. We have special access to the back of planning dep with 3 expeditors and 24 designers ready to go.
Let's start with Design and planning this will run you around $4K to $6K based on how many square feet. Why? Because the city of Los Angeles is requiring that you measure the whole property room by room, inch by inch. It must get transferred into AutoCAD for the plans to get presented to LADBS, they will return your plans with corrections in about 1-2 weeks, we fix the corrections resubmit the plans and pay city fees( rain tanks, title 24 and other fees= $1500- $2700) 4 weeks later you will have your permits and ready to construct.
Here is where it gets tricky because it's was a "learn as you go process" for us since we didn't know what the inspectors were going to look for in these particular projects. One thing is for sure You can't make a hole in the wall to inspect wiring or plumbing. (We did that the first few times and it always ended up bad with inspectors. that why we composed a 5 sheet list with 86 steps.)
I hope this helps and know that this is what we have encountered in 2017. the whole goal for us is to become the premier company for garage to second units.
Real Estate Agent · Venice, CA · Member since 2015 · 182 posts · 125 votes
8y
@Andy Brohard - Thanks for the info. If you already own the home $100k for $2000 in rent is the 2% rule in LA, which is insane. Many people are happy with .65% in LA.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
8y
Wadner Cortez You can’t advertise here. Your post is half soliciting business than providing information.
Nick Hedberg Well that’s cheating, 100k is not all the property aka 2nd unit is worth. You can’t guage it that way, imagine if I have an inherited house free and clear and spent 100k on it and getting 2,000 rent but my property is valued at 800k, that will still hit 2% rule 2/100, it’s the same story, so i kind of cheated on the numbers. If that, I could promote I could do 2% rule in Los Angeles all day everyday.
You definitely can't get 2% in LA, especially in this market. However if someone is looking to house hack this is a route worth investigating. Or if someone already owns their current residence and is looking to try out investing in LA, this would be a fantastic path to try it.
Potential 2% and the homeowner get's to improve their properties value? It sounds like a win/win to me.
@Andy Brohard - Around 600 SF sounds right for an enlarged garage. My goal is to buy a modular/prefab home or a tiny house and add it as a 2nd unit in the rear. The prefab houses are suppose to have a cost advantage. It cost you roughly $166 per SF to convert a property but it just shows how expensive LA is with all of the fees, etc. If you had to do it again, what price could you do it for?
Van Nuys, CA · Member since 2018 · 14 posts · 27 votes
8y
@nickhedberg a prefab might not be a bad idea since one of the biggest builders of prefab is going out of business. What becomes expensive is the electric meter, plumbing, and a/c to meet title 24.
@manolo reading it over again it does come off that way. It didn't feel that way at the moment since I gave real actual case scenario I'm not here to sell anything but help the community and my localseo. My bad sir.
los angeles, CA · Member since 2017 · 31 posts · 5 votes
8y
@andrew brohard
Do you have time sometimes next next week, id love to meet for coffee or lunch to learn about this process for property in Los Angeles.
Contractor · Los Angeles, CA · Member since 2015 · 4k+ posts · 1k+ votes
8y
Nick Hedberg Oh I agree, my point was only considering the 100k was wrong math, but 1800 is 1800, doesn’t matter where it comes from, a room or garage, who cares. However, I only count the net income when investing, so who knows how this affected it.
Los Angeles, CA · Member since 2017 · 78 posts · 82 votes
8y
@Nick Hedberg I'd have to look at all the numbers again but I could shave a few grand for what we did for sure.
If you didn't do the vault the ceilings or expand the footprint of the original structure you could do it much cheaper. It'd be much smaller but could probably still get decent rent in the area for a studio.
@Jimmy Yu Tied for for a bit and then doing some traveling. Shoot me a PM in a couple weeks and we'll find some time.
Real Estate Agent · Venice, CA · Member since 2015 · 182 posts · 125 votes
8y
@Wadner Cortez - Thanks for the info. What's the typical price range you see for bringing the utilities out to a garage? Also when do the @ symbol a little box should pop up with the person's picture. Click on the picture and they will get tagged and notified.
@Manolo D. - I agree 100%. If you are purchasing a property you definitely have to look at the entire picture for an accurate investment evaluation. Properties with an ADU getting 2% cashflow? I don't think so.... But if anyone finds one CALL ME. :-)
@Andy Brohard - Thanks and keep the great info coming! I've really enjoyed your comments..
Rental Property Investor · Phoenix, AZ · Member since 2016 · 553 posts · 314 votes
8y
Nick, the point is that adding the ADU is like buying a rental at 2%. For that matter if they really do add $200,000 in value (a big if) they can be part of a cash out refinance strategy.
Van Nuys, CA · Member since 2018 · 14 posts · 27 votes
8y
@Nick Hedberg Cool thanks for the heads up. depends where the old box is at and if it has to be moved or upgraded. the price starts at $3700 and it can go as high as $10k. Box, Meter, permits, inspection, PUE relocation, Cable relocation or moving the box from one place to the other. every house is different no way to have a definite answer.
@Seth Borman exactly $200k? maybe depending in the area. Culver is $800 a square feet while Van nuys is $450-$500 a foot. so if you convert 400 feet or build 600 feet of new construction... for sure $160K.
@Andy Brohard there's a real estate agent who wrote a piece and the lowest he was able to do was $67k but it took him nearly 8 months to build himself.
Rental Property Investor · Phoenix, AZ · Member since 2016 · 553 posts · 314 votes
8y
@Wadner Cortez I've been looking around the internet and I haven't seen appraisers come to agreement on how to value an ADU. One of the approaches was to value using the income method and subtract about 10%. That $200,000 figure would be pretty conservative using that method as an ADU is a very low expense way to build a small apartment.
Ultimately I think one of the big hold ups on ADUs nationwide is lenders and brokers getting a handle on what exactly they are dealing with.
Los Angeles, CA · Member since 2017 · 39 posts · 25 votes
8y
Great thread. Are there Zoning restrictions for ADUs or regardless of where you live you can proceed as long as you get all the necessary inspections and permits?
Real Estate Agent · Venice, CA · Member since 2015 · 182 posts · 125 votes
8y
@Seth Borman - I concur. If you are looking at adding an ADU as an independent real estate transaction then you can hit the 2% mark. If you look it as part of the strategy for the whole property, the numbers look different from a cash flow perspective. However if you can add 500 SF to a property that's $150,000 (at $300 per SF) for lower priced areas. In Venice where we see $1000 per SF that's HALF A MILLION DOLLARS. I'm currently helping clients purchase a property with an ADU. The home is a 2/2 and the ADU is a 1/1. The property is treated on the MLS as a 3/3 which is a huge benefit.
@Wadner Cortez - I completely understand. There are many variables. I appreciate the range, it helps me put a stake in the ground to at least get an idea. Can you PM me your info and your companies info? I want to add you to my database and vendors list.
@Shawn Ward - For your flips, do you guys ever factor in the potential option of adding an ADU? If you can turn a 2/1 one into a 3/2 far cheaper then adding square footage, I'm sure it opens up some new options. Think of all the cheap 2/1s out there with a garage. (Sssshhhhhhh, don't tell anyone I mentioned this).