I have a chance to buy in (via TIC) to what is basicly a 10' x 24' shed at an advantageous price that I've been given the verbal ok from SF Planning that would work for an ADU. I'd have to run sewer and all utilities to it, as well as do a studs down remodel (it actually has good bones and a reletively newer asphalt shingle roof). Assuming a $100K build/permitting budget, and 80% occupancy once it's done as an AirBNB rental, it "should" yield me almost 10%, and be a possible condo candidate in 2022 when the lottery opens again. The question is, what pitfalls aren't I seeing here? I have a contractor (who doesn't know ADU law), a PM and cleaning crew lined up (I own other properties in The City, and have done VRBO in other houses, so I know those issues). What can SF Planning do to me to go back on their word? Any particular city inspector problems for these things? Thanks in advance for any insight, I appreciate it!

Hi Bob, the only pitfall I see is that the ADU process is very slow, our new mayor is trying to improve things but the last time I checked 4 months ago, the SFDBI was announcing 6-8 months wait to get the ADU permits approved. Also you probably want to work with an architect who has ADU experience I can recommend one if you want. Here is a recent article with more information: http://www.sfexaminer.com/city-easing-onerous-approval-process-accessory-dwelling-units/

Hi, I'm an architect and my firm OpenScope Studio wrote the ADU handbook for the Planning Department. We're currently working on 30+ ADU projects in San Francisco, mostly in larger apartment buildings for corporate clients but we are doing a few in single family homes or duplexes too. I would say your cost estimate is way off, I haven't heard of anyone doing a project like that for $100k (granted I don't know the details) because construction on small projects is running $325 (at the EXTREME low end) and up - some other commenters have mentioned this as well. The permitting timeline has improved substantially in recent months, both Planning and DBI have introduced new procedures. That being said it's at least 9 months to get a building permit if all goes smoothly. If anyone has detailed questions feel free to contact me directly. I will warn everyone: IF YOU PUT IN AN ADU YOU WILL NEVER BE ALLOWED TO AIRBNB IT! This is very clear in the law, and is not allowed under any circumstances. Do not believe real estate agents that may tell you otherwise. If you want to create a unit to Airbnb build an extra master suite with separate access but do not put in a kitchen or go the ADU permitting route with it.

Account Closed Permitting is the easy part if the designer does a good job designing, labeling, and filling out the correct forms, you will be out in 1 month. Now is that the case? Nope, usually, it takes 6-8 weeks to get approved.. city. County of los Angeles up to 4 months. as far as shells compared to wood, wood will always outlast sheds plus it retains its value on Zillow and Redfin (ill share with you a posting i have were cheap material compared to great material can make a $100K difference.) in the long run. unless you know the procedures and prior experience with the right "Subs" it can make a 4-month job turn to a 9-month horror. and I think if you look into it a bit more you could get a better quote then $300 and have it done in 4 months without lifting a finger. Hope this helps

If condo conversion is your ultimate goal, you might run into trouble with ADU, as opposed to a regular cookie cutter duplex. Consult an attorney specialized in SF condo conversion

I'm looking at doing an ADU up in the Napa Valley, it seems to be a good opportunity right now for areas with restricted housing supplies and steep prices. I've been looking at an outfit called North Coast Packaged Homes (is it kosher to mention them? I've got no financial interest). They have pre-engineered homes in the 650-900 foot range that are pretty cost effective. My family is involved in the trades and and I've heard of $850-1,000 per square foot up here. That said these projects are usually top shelf everything.

Be mindful with Airbnb as well. SF short term rental rules treat it as a separate unit, so you must rent for > 30 days for each reservation.

Are you buying just the shed? Or a tic unit that includes the shed? 240 sq ft is a small studio, so you need to compare your all in cost to it’s potential value...I’d look at 15x GRM as a rental unit value, and possibly what it would sell for as a tic unit to an owner occupant. If there isn’t significant equity value, I wouldn’t bother, as getting an ADU completed in this city as a royal PITA. An ADU can’t convert to condo btw.

Anyone with an ADU (Accessory Dwelling Unit) build experience?

Chen Zhou

Rental Property Investor · Santa Clara, CA · Member since 2019 · 160 posts · 156 votes

7y

@Bob Johnson

Consider San Jose. Approval process is much faster and rules are much more relaxed.

I recently got permit approval in SJ (Willow Glen) for a 630 sqft attached ADU + 170 sqft addition to the existing unit. It took me about 4 months to get my permit and now I'm 3 months away from completion of the construction.

Here's the cost breakdown:

Architect + structural engineer	$ 7,000
Park fee	$ 4,450
School fee	$ 2,192
Permit application	$ 2,653
Permit Issuance	$ 9,416
Contractor (estimated)	$ 170,000
Inspections (estimated)	$ 4,000
Landscaping and other miscellaneous	$ 300
Total (estimated)	$ 200,011

3 Reply

Janice F Lee

Real Estate Agent · San Francisco · Member since 2019 · 2 posts · 0 votes

7y

You cannot Airbnb ADU in SF

0 Reply

Richard Goore

Realtor · Sacramento, CA · Member since 2015 · 70 posts · 34 votes

7y

@Bob Johnson If you are still pursuing and want a contact of mine who I have had discussions about building ADU's on existing properties I am happy to share. His company builds all over Nor Cal and he already has a number of plans for ADU's - 2+1, 1+1, garage conversion, etc. I don't know if he has built this in SF but he further along in the process than anyone else I have spoken to. He's familiar with ADU laws (at least in Sacramento) and is looking to expand that part of his companies business. Trying to think out of the box for some investor clients here in Sacramento (I am an agent) so I am looking for SFH with large enough properties and will plan to use him to build ADU's to make them duplexes, in theory. Happy to make an introduction if interested.

1 Reply

Adam Mayberry

Architect · San Jose, CA · Member since 2014 · 90 posts · 57 votes

7y

@Richard Goore Send my way would love to learn more

1 Reply

Brian Larson

Investor · San Jose, CA · Member since 2018 · 313 posts · 230 votes

7y

@Richard Goore - I would love to hear more about any of your ADU projects. I think the business model you described above is the next great investment model in Sacramento and the Bay Area.

I am currently working to build an ADU at my downtown home in San Jose.

0 Reply

Richard Goore

Realtor · Sacramento, CA · Member since 2015 · 70 posts · 34 votes

7y

@Adam Mayberry

@Brian Larson

Msg me with your email and I will make the intros.

0 Reply

John V.

Rental Property Investor · Bay Area · Member since 2018 · 2 posts · 0 votes

7y

Does anyone have recommendations for architects? The ones I've talked to are quite pricey, but I'm looking at an ADU + extension.

0 Reply

Chen Zhou

Rental Property Investor · Santa Clara, CA · Member since 2019 · 160 posts · 156 votes

7y

@John V. Did exactly the same as you are thinking of. Will message you separately.

0 Reply

Janice F Lee

Real Estate Agent · San Francisco · Member since 2019 · 2 posts · 0 votes

7y

Many ADUS are not subdividable to condos unless you are doing voluntary or mandatory seismical retrofit. There is currently a condo conversion moratorium for 3-6 units.

0 Reply

Amit M.

Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes

7y

^ only applies to San Francisco

0 Reply

Matthew Ryan

Developer · San Francisco, CA · Member since 2015 · 103 posts · 47 votes

7y

Design Draw Build in Oakland is helping Oakland write and amend ADU laws. Great resources who can help. I can give a personal intro if needed.

0 Reply

Jim G.

Investor · Bay Area, CA · Member since 2017 · 85 posts · 35 votes

7y

Found a contractor. I am in the process of build a detached ADU in San Jose... will report back the progress.

0 Reply

Chen Zhou

Rental Property Investor · Santa Clara, CA · Member since 2019 · 160 posts · 156 votes

7y

For those of you who're interested, I completed my ADU project and you can see the 3D visualization of my place here:
https://my.matterport.com/models/hRAxQheq93H?section=media&mediasection=showcase

0 Reply

Anyone with an ADU (Accessory Dwelling Unit) build experience?

Anyone with an ADU (Accessory Dwelling Unit) build experience?

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