Any body doing ADUs ( granny flats) in Vista, San Marcos
New to Real Estate · San Diego · Member since 2019 · 45 posts · 12 votes
Hi, I recently bought a SFR with a detached garage. The plan is to convert the garage to a rentable ADU. I am in the stage of finalizing the plans before sending over to the city.
I am contemplating either a 1Bed1Bath with patio vs 2Bed1Bath with no patio extension. On Paper, the 2Bed1Ba extension makes more sense but I am not convinced having no outdoor space would attract long term tenants.
I would like to get in touch with someone who has run the numbers for their ADU/Granny Flat in north county San Diego.
Thanks, Manraj
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See agentsIm starting an ADU in Escondido right now and had previously started one in Vista on an attached garage on a SFR. My take is in line with Dan where its critical to make sure that the ADU makes sense for your particular goals and in line with the location of your property.
In my Vista property, I found that the rental market in my particular neighborhood was not quite receptive of an ADU. Im sure that the valuation would have also been low as I feel I might have been trying to push a project where it did not fit. I ended up not building the ADU but was ok with it since we ran our original pro formas without it. My biggest takeaway was to evaluate deals with worst case scenarios and with exit strategies and decide if you are ok with the worst happening.
Hi, I recently bought a SFR with a detached garage. The plan is to convert the garage to a rentable ADU. I am in the stage of finalizing the plans before sending over to the city.
I am contemplating either a 1Bed1Bath with patio vs 2Bed1Bath with no patio extension. On Paper, the 2Bed1Ba extension makes more sense but I am not convinced having no outdoor space would attract long term tenants.
I would like to get in touch with someone who has run the numbers for their ADU/Granny Flat in north county San Diego.
Thanks, Manraj
My initial protege had a property that had a garage converted to ADU in escondido. The ADU would have had a hands off cost just over $100k (before wood prices shot up). It was a 1 br with small living room and had extra little room built (not part of original garage that was a pantry and laundry area. He did not build it hands off, so he had significantly less than $100k invested. It was valued by the appraiser at ~$50k.
Make sure their are comps that justify the costs of the ADU addition. It would suck to start with a huge negative return. This negative return could consume years of cash flow.
by the way both his units had their own yard space. The parking was tight.
Good luck
Hi, I recently bought a SFR with a detached garage. The plan is to convert the garage to a rentable ADU. I am in the stage of finalizing the plans before sending over to the city.
I am contemplating either a 1Bed1Bath with patio vs 2Bed1Bath with no patio extension. On Paper, the 2Bed1Ba extension makes more sense but I am not convinced having no outdoor space would attract long term tenants.
I would like to get in touch with someone who has run the numbers for their ADU/Granny Flat in north county San Diego.
Thanks, Manraj
My initial protege had a property that had a garage converted to ADU in escondido. The ADU would have had a hands off cost just over $100k (before wood prices shot up). It was a 1 br with small living room and had extra little room built (not part of original garage that was a pantry and laundry area. He did not build it hands off, so he had significantly less than $100k invested. It was valued by the appraiser at ~$50k.
Make sure their are comps that justify the costs of the ADU addition. It would suck to start with a huge negative return. This negative return could consume years of cash flow.
by the way both his units had their own yard space. The parking was tight.
Good luck
Hi, I recently bought a SFR with a detached garage. The plan is to convert the garage to a rentable ADU. I am in the stage of finalizing the plans before sending over to the city.
I am contemplating either a 1Bed1Bath with patio vs 2Bed1Bath with no patio extension. On Paper, the 2Bed1Ba extension makes more sense but I am not convinced having no outdoor space would attract long term tenants.
I would like to get in touch with someone who has run the numbers for their ADU/Granny Flat in north county San Diego.
Thanks, Manraj
My initial protege had a property that had a garage converted to ADU in escondido. The ADU would have had a hands off cost just over $100k (before wood prices shot up). It was a 1 br with small living room and had extra little room built (not part of original garage that was a pantry and laundry area. He did not build it hands off, so he had significantly less than $100k invested. It was valued by the appraiser at ~$50k.
Make sure their are comps that justify the costs of the ADU addition. It would suck to start with a huge negative return. This negative return could consume years of cash flow.
by the way both his units had their own yard space. The parking was tight.
Good luck
If your goal is return, starting with a negative position of over $50k is a return killer. It consumes years of cash flow just to achieve a neutral position. In addition, it prevent extraction of the initial investment which is a return killer as best return s achieved when investment is minimized.
The appraiser comped the house (it was a 3 BR, 2 Ba) and valued the ADU similar to low value footage such as office space. So the comps were other 3/2 SFH. So it valued the ADU ~$50k below what the hands off costs would have been.
My protege did alright because he actively participated in the ADU addition, so his costs were significantly below the hands off cost. He also was not a desperate seller. When the appraisal came in lower than the negotiated price, he barely budged because he was willing to rent it. Having a back up plan of rental gave him the leverage. The buyers paid $30k above the appraised value. As an investor, I would never pay over the value. Similar, I would not pay to add an ADU to start with a negative position. I view them similarly.
Make sure ou understand how the ADU will be valued. A $50k negative position would consume a lot of cash flow.
Good luck
Hi Dan,
Thank you so much for your time. Really appreciate the input on this.
"The appraiser comped the house (it was a 3 BR, 2 Ba) and valued the ADU similar to low value footage such as office space. So the comps were other 3/2 SFH "
I think I may have overestimated how the comps would work for a property with an ADU. Not that I am looking to sell the place anytime soon, but I would definitely want to access the equity, say a HELOC, in future for other projects.
I'll find out with the city. i'll give them a call
Thanks, Manraj
Hi Dan,
Thank you so much for your time. Really appreciate the input on this.
"The appraiser comped the house (it was a 3 BR, 2 Ba) and valued the ADU similar to low value footage such as office space. So the comps were other 3/2 SFH "
I think I may have overestimated how the comps would work for a property with an ADU. Not that I am looking to sell the place anytime soon, but I would definitely want to access the equity, say a HELOC, in future for other projects.
I'll find out with the city. i'll give them a call
Thanks, Manraj
I do want to point out that the value of the ADU varies by location. In some areas the ADUs appraise fine. In other areas they appraise >$50k below hands off costs. I saw a post this morning that stated the ADU was valued at $10k. This is an extreme, but shows the need to understand how the ADU will be valued prior to proceeding with the ADU addition.
While it is an extreme, there are many posts of disappointing values reflected in appraisals. These low appraisals result in starting with a large negative position and means no method to extract the investment out. This limits future investment opportunities and greatly affects the return.
In summary, I am not stating ADUs in all areas appraise poorly, but it is up to you to know how the ADU will appraise. You do not want to start with a huge negative position.
Good luck
Im starting an ADU in Escondido right now and had previously started one in Vista on an attached garage on a SFR. My take is in line with Dan where its critical to make sure that the ADU makes sense for your particular goals and in line with the location of your property.
In my Vista property, I found that the rental market in my particular neighborhood was not quite receptive of an ADU. Im sure that the valuation would have also been low as I feel I might have been trying to push a project where it did not fit. I ended up not building the ADU but was ok with it since we ran our original pro formas without it. My biggest takeaway was to evaluate deals with worst case scenarios and with exit strategies and decide if you are ok with the worst happening.
Hi @Geo Cruz ,
Intresting.
Can you please elaborate wat you mean by " rental market in my particular neighborhood was not quite receptive of an ADU." . Did you have prospective tenants not keen to rent an attached ADU to the main house?
Also, regarding your Vista property, was your plan on buy-&-hold to rent or to sell off the unit once the ADU was complete?
Just circling back. I've been extremely busy installing ADU's throughout San Diego County and a lot has changed. If you're in California I would recommend boning up on the latest HCD ADU laws and regs (https://www.hcd.ca.gov/policy-...). I'd also get up to date on all the recent FDMC/FNMA FHA laws, https://www.americanbanker.com... for manufactured housing which also applies to ADUs. https://sf.freddiemac.com/faqs... and https://appraisersblogs.com/fa...
A lot has changed in ADU land since the premier 2017 rollout of SB1079 and it's a challenge trying to jump through all the hoops. The State is constantly updating and amending their law/s causing jurisdictions to change their ordinances about as often as we change our bed linens. With all these hoops to jump through it's even difficult for contractors, purveyors, architects and myriad stakeholders to follow the bouncing ball.
Add to that the challenge of appraisals and you've got a hat trick that is keeping the entire ADU industry on its toes 24/7/365. For the turn and burn investor trying to throw up an ADU and sell to make a fast few it's not quite time. There just aren't that many ADU properties that have sold let alone even on the market yet. Now for the buy and hold type the ball is in your court. If you were prudent in building/installing your backyard home or you purchased a property with one already built out, time is on your side.
All is not bad, however, At the end of the day we find that about 50% of our clients are adding them to their property for a relative, home health care provider, domestic employee, etc. The other 50% are investors seeking additional revenue streams and ROI. Bottom line the backyard home biz is here to stay and at the end of the day you won't be sorry you have one IMO.