Multi family property vs Single Family with 4 ADUs

[Alex U.]

Would a Single Family Home and building 4 ADUs on it  be considered an inferior approach to purchasing a multi family zoned 4-plex?  There are very few multi family properties for sale in our area.  Wanted to see if anyone else has purchased a single family home and added multiple units to it, and how it would compare when selling this type of property from an appraisal standpoint.  

[Twana Rasoul]

@Alex U. There are a lot of factors that go into that decision including location, total cost, initial capital required, holding cost, ROI, etc when choosing to go with a small multifamily vs a SFR and multiple ADUs. One potential challenge you run in to and I've seen it here in San Diego, if you are trying to sell a house with 3 or 4 ADUs who is your buyer and how quickly can you unload that property if you needed to vs a traditional 4plex. Buyers may not have traditional financing available to them to make that purchase and will be limited to some non-QM options at a higher rate or potentially a commercial loan so that limits the buyer pool vs a traditional 4plex. In some neighborhoods and price points it would be easier to find buyers than other areas. Finding a buyer for a larger development of 30-50 units form a developer that utilized complete communities/TPA would seemingly be easier.

Just something to think about.