All Forum Posts by: Felicia Nitu

Thinking about adding more levels to a building? Before committing time and money, it’s important to know whether vertical expansion is even allowed. A Development Analysis helps you make informed decisions by reviewing zoning laws, building codes, and local regulations that directly affect your property’s buildable potential.

This analysis goes beyond basic property info. It checks whether the structure and site meet the criteria for more height or added floors. It also confirms compliance with setbacks, height limits, and occupancy rules, reducing the risk of starting a project that ends up blocked by regulations.

Why it matters:
Understanding what’s possible before design or permitting begins saves time, reduces financial risk, and keeps projects moving efficiently. For agents, offering clients a Development Analysis can build trust and speed up deal flow. For investors, it reveals untapped potential. Adding units vertically means more square footage, higher income, and better returns without needing additional land.

Building an Accessory Dwelling Unit (ADU) can be a smart way to add value and create income, but covering the upfront costs often holds people back. Fortunately, there are several financing options available to make ADU construction more accessible.

Home Equity Lines of Credit (HELOCs)
A HELOC works like a credit card backed by your home's value. You borrow as needed and only pay interest on the amount used. This flexibility makes it a top choice for ADU builds that may have fluctuating costs over time.

Home Equity Loans
This is a lump-sum loan based on your home's equity, with fixed interest and predictable payments. It's a simple option for homeowners who want a set budget for their ADU from the start.

Cash-Out Refinancing
This allows refinancing the mortgage for a larger amount and taking the extra cash. It's an easy way to get funds for an ADU without securing a separate loan.

Renovation Loans
Intended for home upgrades, these loans can cover design, permitting, and construction costs for an ADU, making them an all-in-one solution.

Private Lender Loans
Some private lenders offer financing specifically for ADUs, with faster approvals and more flexible terms compared to traditional banks.

Why it matters for agents and investors:
Real estate agents can guide clients toward these financing tools to make ADU conversations easier and more practical. For investors, these options mean less capital upfront and quicker access to income-generating units. Whether the goal is resale, rental income, or increasing long-term value, accessible financing helps bring ADU projects to life faster.

SB-423 strengthens housing streamlining in California by requiring proposed projects to comply with objective zoning, subdivision, and design standards, but it also offers something critical: flexibility.

Through the State Density Bonus Law, developers can request incentives, waivers, concessions, and parking reductions that allow them to modify local standards. This means they may be able to build taller, include more units, reduce setbacks, or avoid certain design constraints that would normally limit their project’s size or efficiency.

This flexibility helps projects become more financially feasible while still meeting local housing needs.

How agents and investors benefit:
For real estate agents, SB-423 opens new doors to market development-ready sites with greater potential. Investors gain access to unit counts, fewer parking requirements, and more buildable area, especially in areas where local rules might otherwise restrict growth. With the right property and strategy, SB-423 can significantly improve the return on infill and multifamily investments.

One of the major distinctions between SB-9 and SB-684 lies in how they treat lot size and subdivision limits.

Under SB-9, there’s no maximum size limit on eligible lots. This gives landlords and homeowners more flexibility when it comes to large parcels, especially those looking to build 2 units or split their lot.

On the other hand, SB-684 has clearer boundaries. It applies only to properties that are 5 acres or smaller, and it allows these parcels to be subdivided into up to 10 lots. Each of these lots should be at least 600 square feet, which helps preserve buildability while still encouraging density.

Why this matters for agents and investors:

SB-9 opens the door to development opportunities on larger sites without a strict size limit, making it a useful tool for expanding housing in suburban and urban areas alike. SB-684, while more limited in scope, offers a streamlined pathway to split medium-sized parcels into multiple lots, ideal for investors looking to create smaller, for-sale units or multiple rental properties. Real estate agents can use this knowledge to better guide clients toward the strategy that fits their land, goals, and local zoning landscape.

SB-9 requires that any rental agreement for a unit on a property created through an urban lot split must be for more than 30 days. This provision was included to stop short-term rentals, such as those commonly listed on Airbnb, from dominating these newly developed parcels.

The goal is clear: support permanent housing, not vacation stays. By pushing for longer-term rental agreements, SB-9 helps promote neighborhood stability and discourages frequent turnover. The law supports the creation of housing that serves residents not tourists so communities can grow in a more sustainable and balanced way.

How agents and investors benefit:

For real estate agents, this means representing properties with long-term income potential in stable neighborhoods. For investors, it sets clearer expectations and limits competition from short-term rental operators, opening doors to steady rental cash flow and long-term tenant relationships.

Building an ADU can be expensive, but the CalHFA ADU Grant Program offers up to $40,000 to help cover upfront costs. Homeowners earning $158,000 or less may qualify, making ADU construction more achievable.

How the CalHFA Grant Helps

Covers Upfront Costs
• Site prep, ADU design, and permits
• Eases early-stage financial pressure

More Control for Homeowners
• No rental restrictions, you choose your tenants
• Full ownership stays with you

This grant brings ADU construction within reach for many homeowners looking to create extra space or generate rental income.

When agents showcase a property's Development Opportunity, they open the door to a broader pool of buyers.

It’s not just investors and developers who pay attention, today’s homebuyers are increasingly curious about ways to build equity through expansion, ADUs, or redevelopment. Even buyers unfamiliar with development can be drawn in when the potential is clearly presented.

By positioning a listing as more than just a home, as a future project or investment, agents create urgency, increase desirability, and often attract more offers.

Bottom line? The more value you show, the more buyers you attract.

Accessory Dwelling Units (ADUs) have quickly become one of the most strategic ways to build wealth through real estate. As housing demand outpaces supply, ADUs offer a flexible and high-return path for homeowners, investors, and developers alike. 


Steady Income, Strong Demand

Detached ADUs of up to 1,000 square feet can bring in $2,000–$3,000 per month in rental income. With consistent occupancy and low vacancy rates, they’re a reliable source of long-term cash flow, especially in areas where larger rental units are in short supply.

Affordability Meets Opportunity

Emerging markets within 30 miles of major metro areas are ideal for ADU development. These locations offer lower land and construction costs while still benefiting from the rental demand driven by nearby cities. That means higher margins and less competition.

Why It Matters for Agents and Investors

For agents, ADUs present a chance to stand out by helping clients unlock new value in their properties, whether they're buying, selling, or exploring multi-generational living. For investors, ADUs are a scalable strategy that balances upfront cost with dependable income and long-term equity growth.

The bottom line? Whether you’re representing clients or building your own portfolio, ADUs are a smart move in today’s fast-moving market.

One of the key criteria under SB-423 is zoning. To qualify for streamlined residential development, a site must be zoned for residential or mixed-use. But there's more flexibility built in, thanks to recent legislation.

Per the Middle-Class Housing Act of 2022 (SB-6), sites zoned for office or retail may also qualify, as long as they meet specific criteria laid out under SB-6. This expands opportunities beyond traditional housing zones, opening the door to converting underused commercial sites into new housing.

Another key requirement: the site must have a general plan designation, meaning the local jurisdiction has officially mapped out the area’s intended use. This ensures that development aligns with citywide planning goals.

How Real Estate Agents and Investors Benefit:

For agents, this creates a new way to pitch sites that were once off the table. Vacant office parcels? Old strip malls? These can now be marketed as potential housing opportunities, especially in areas struggling to meet housing targets.

For investors, it broadens the field for acquisition. Properties that previously had limited utility can now become housing projects with less red tape, thanks to SB-423’s streamlined process. Combined with SB-6, this is a powerful tool for spotting hidden value in zoning maps.

SB-684 provides exciting opportunities for property development, but it's important to recognize that environmental factors can still impose restrictions. Specifically, properties designated as hazardous waste sites, wetlands, agricultural zones, or prime farmland face limitations. These areas typically cannot be subdivided or developed unless they are already designated for residential use or meet specific state safety requirements. This ensures that environmentally sensitive land remains protected, preserving its value for conservation and sustainability.

In addition, properties under conservation agreements or serving as wildlife habitats are usually exempt from development. This protects ecosystems and wildlife species, ensuring that essential natural resources are maintained for future generations.

For real estate agents and investors, understanding these restrictions is important. Agents benefit by guiding clients through these environmental limitations, helping them identify properties that meet the criteria for development under SB-684. This expertise can lead to better-informed decisions and more successful transactions. For investors, staying informed about these factors helps in evaluating potential risks and opportunities.