ADU on MFR zoned lot in California

[Jim Spatzenfeld]

Does anyone know if I can add an ADU on a lot that is zoned multifamily? I'm trying to save the water and sewer connection fees and traffic impact fees (~$70k just for these two fees alone) that would otherwise apply.

[Erik Browning]

Quote from @Jim Spatzenfeld:

Quote from @Erik Browning:

Quote from @Jim Spatzenfeld:

Does anyone know if I can add an ADU on a lot that is zoned multifamily? I'm trying to save the water and sewer connection fees and traffic impact fees (~$70k just for these two fees alone) that would otherwise apply.

 Yes, you can, but you need to speak with the city to make sure your property can handle it. I'm a lender here in CA and can tell you that state wants more housing. There are even incentives for homeowners to use the state's funds to help with the construction - even on multifamily properties. 

Not all properties are equipped to handle them though. If you have a septic, you might need to upgrade the septic. If your property does not have enough square footage to support a habitable unit, it will be denied due to code violations. If you want a JADU, they require that you continue to live in the property. 

It all just depends on your situation.

Most people that want to build an ADU typically don't have enough cash to do so, however. And when they try to get a HELOC, they quickly find out that the cash they can access from their home is simply not enough for construction. Again, it all depends on your property and access to capital, but yes - multifamily is ok.

Thanks for the response. It’s currently a vacant lot, almost 1/2 acre. Seems to me they want to discourage development through excessive fees. I want to build 8 apartments. Just alone the water department fees to connect water+sewer (which is right in front of the lot) they charge just under $400,000 (almost $50k per unit). Traffic impact fees for 8 units is $136k. So just the fees + building permit alone add up to around $600,000

 So even though this may be discouraging, part of being an investor is identifying a deal when you see one. If it appears that the build/acquisition/investment isn't going to cash flow or have the ability to recoup your cash invested, then it's just probably not a good deal. What that means is that it's the seller's problem.

The costs are the costs. Don't get hung up on the costs from the city or the price of the loan or development. Those all should be worked into the calculation - that's what makes you an investor. I recommend you look for a real opportunity that makes sense from day one, don't be discouraged by this one.

The costs are the costs and there are still deals out there, it just takes some digging.