All Forum Posts by: Nate Wiger

Others have said it, but there's no substitute for visiting the local county office and talking to all the departments. Just carve out a full day and go department to department. Zoning may have no problem with a high density development but then you talk to land use and there's some easement for spotted northern quail migration that cuts across the lot that you have to take into account.

Hi @Patrick Yau I know this post is from a year ago, but curious what you did about the 4/8 unit rehab? Did you end up pursuing this deal? Were you able to vacate tenants? Thanks.

Have you tried one of those "all in one" ADU builders? Quite a few companies in LA that will handle the whole process. Normally you get value DIY'ing but ADUs are so popular there's a whole cottage industry right now. Also LA has preapproved plans that are really nice AFAIK.

Yes @Zach Wain as long as I could get an understanding of the local area

You're in the county of SD, who I have dealt with many times. Generally they're good to work with but slow. The good news is ADUs are supposed to be a streamlined process and the county even has pre-approved plans: https://www.sandiegocounty.gov...

There are also lots of companies out there that will handle the whole process for you, since ADUs are so popular. You could get a couple quotes from them and see how they compare.

I disagree with some posters who say they're a bad investment. It depends on the area. In Ramona on 1/2 acre, you'd be able to build a nice big 1200 sq ft 3-bedroom ADU with standard grade fixture way away from your main home and rent it to a family and it would probably work out nicely.

There's no technical definition I'm aware of, it's generally a sliding scale. For this lot, we did all the environmental studies, grading plans, fire approvals, and landscaping plans, along with a preliminary architectural design since it helps with the sale if the buyer can "see" themselves living in the property. A blank piece of land with no house design is generally too much to grok for people.

We didn't do any actual grading to the lot this time. We had planned to grade it and create a pad which would have generated a lot more value, but with the changing market, we wanted to minimize our exposure.

Purchase price (off market): $595k

Improvements cost: $76k

Seller note interest paid: $53k

Property taxes paid: $11k

Total cost basis: $735k

Selling price (in escrow): $1.2M

Gross profit: $465k

I'm very much an amateur and if I was doing it for real I could probably move a bit faster and save quite a bit of money on the improvements - I used an overpriced civil engineer who I won't use again. I don't think I could turn this into 6 months but probably 2 years rather than 3. I was just talking to my land broker about another deal and he was saying it would be similar, $200-300k outflow and 2-3 years. Again this is in coastal CA which is really tough to develop in so YMMV.

This is awesome and I've been considering something similar. How are you financing it? And did you get any density bonuses or other incentives from the city?

ADUs are different than other projects in CA because they are required to be approved. Normally the value you get from architects is navigating all the back-and-forth with setbacks and frankly, the whims of the local building department. I'd look into the pre-approved plans (every city seems to have these) and pay $0 for architecture.

https://www.ladbs.org/adu/stan...

I've done a few small scale land improvement deals. Currently in escrow selling a parcel I improved. Two things I've learned about land.

First, it's a very long play, at least in CA. This one took me 3 years. I know that's normal because there's a neighboring parcel being developed by a very well known professional builder and he's at the same stage as me. Unless you can get special treatment through low income or high density development, it's a snails pace due to all the approvals needed.

Second, financing is very difficult. It's typically all cash or hard money. Different than MF development where you can get a construction loan based on future leased values.

These things work for me because I have a day job with W-2 income, so I typically do everything with cash, and I'm not in a hurry to make a profit. My uncle does spec home building for a living and it's a very tough business as Eliott said.

Have you considered an SB-9 lot split since you are occupying the property? You could split the lot and build a total of 3 new structures, 1 ADU on your lot, and 1 main + 1 ADU on the new split lot. SB-9 is a great option if you are occupying the property, since that's one of the key requirements. And a separate lot will generate more value.