Buying & Selling Real Estate
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated over 4 years ago,
Finding numbers to decide if I should add a JADU to my flip
Hi everyone. I am an RE Investling. (I like this term a bit better than 'newbie'.)
: )
Feel free to skip to the end of my post for a quick summary of my question.
I run my own business in creative services so I have to fit my REI into the spaces when I have down time so it's a bit slow-going.
I started a few years back by acquiring a run-down house on a very desirable street near to where I grew up in SoCal.
I paid cash and bought it outright and then I rented it out for a reduced rent while I saved up for a full renovation. It did cash flow (slightly) for me for the past year or so and now I'm ready to upgrade the entire property and flip it.
I've learned a lot since I purchased it and would never want to own any income property in California again, especially after my property was temporarily commandeered by the state to protect renters due to Covid. The renter protections in California are something I'd never want to tussle with again. (Did you know San Francisco made the Covid-19 moratoriums on evictions permanent? That's crazy-pants!)
So once I sell my 3/4 SFH in SoCal, I will be looking for more landlord-friendly locales for my next purchase, probably some tri or fourplexes.
Anyway, enough of my backstory and onto my question. On the quiet cul-de-sac where my property sits, nobody uses their garages for cars. The cars are all parked in the driveway and people use their garages for workshops, game rooms, home-brew operations and kid spaces. And my property has room for about 7 cars in the driveway. I'm thinking under these circumstances, turning the garage into a JADU/workspace would significantly increase the value of the home. The garage already has plumbing, it's own yard area and enough height for a loft.
In addition to these potentially favorable factors, the state of California has improved J/ADU legislation to promote their development including allowing ADUs and JADUs to be built concurrently with a single-family dwelling, opening areas where ADUs can be created to include all zoning districts that allow single-family and multifamily uses, modifying fees from utilities such as special districts and water corporation and limited exemptions or reductions in impact fees.
I have been watching houses get listed and sell in this area for over a decade, so I feel pretty confident that adding an ADU would increase my ROI. But I want to be sure I'm basing my decisions on data.
I have a knack for accurately guessing for how much something should cost or might sell for. I'm not as good at running numbers but I'm planning to focus on developing this skill this year.
TLDR; Once I have all my known figures in my spreadsheet, how do I find numbers on J/ADUs and how they impact home values?
Any help would be appreciated.