West Oakland, Convert shed to a habitable space?

Question

Bigger Pockets Community,

I currently own a duplex in West Oakland where I have a shed/cottage in the rear of my lot. I went down to the city to talk to them about making the shed a habitable space (upgrading foundation, new plumbing, upgrading the electrical, new roof, and adding a full bath). The city told me that I can NOT do that since zoning did not allow it. After going back and forth, the city gave me 2 options;

• 1. I can extend the duplex all the way to the shed, thereby making the shed part of the lower unit. This would NOT make the shed a 3rd unit; it would just be an extension of the lower unit.The estimated cost is about 60-70 thousand
• This would NOT make the shed a 3rd unit; it would just be an extension of the lower unit.
• The estimated cost is about 60-70 thousand
• 2. I can leave the shed where it is and had a half bath. I would have to update the foundation and add a sewer lineI can NOT make it a habitable spaceThe estimated cost is 10-15 thousandThis can be used as an office space or art studio
• I would have to update the foundation and add a sewer line
• I can NOT make it a habitable space
• The estimated cost is 10-15 thousand
• This can be used as an office space or art studio
• 3. Just build the 3rd unit illegally I don’t want to do this because I could run into some issues in the future with the city and possibly the tenant
• I don’t want to do this because I could run into some issues in the future with the city and possibly the tenant

• This would NOT make the shed a 3rd unit; it would just be an extension of the lower unit.
• The estimated cost is about 60-70 thousand

• I would have to update the foundation and add a sewer line
• I can NOT make it a habitable space
• The estimated cost is 10-15 thousand
• This can be used as an office space or art studio

• I don’t want to do this because I could run into some issues in the future with the city and possibly the tenant

BP community, my question, what do you think is the best thing to do.

• Option 1 would cost more and would add to the value of the property. And I may be able to Air B&B the new addition.
• Option 2 could be cheaper but I wonder if it is wasted money because I could just use that 15K and buy another property. However, I may be able to rent it as an office or art studio but I don’t know if there is a market for that in West Oakland.
• Option 3, I don’t want to consider it, but thought it was worth listing it just in case you have an opinion on it.

What do you suggest I do?

Account Closed · Answer

I don't think any of the options are viable, Option 2 could with more research.

Option 1 - spending $60-70K and not even netting another unit is a waste. It will take you forever to recoup this money in additional rent on a bigger unit. If you were able to spend this amount to add a 3rd unit, then I'd do it in a heartbeat. But you won't get much more rent for such a large expenditure.

Option 2 - If you can spend $15K and rent out as an office or a studio, perhaps that would be a good option. But I would do more research and possibly even list it to test out the demand for such a space.

Option 3 - Don't even think about it. A year ago I would have told you to do it. But after the Ghost-town fire, the Building department is on high alert and is out in full force looking for illegal additions. All is takes is one bad tenant or a neighbor spat and you'll get a visit from the Building Department, and they don't take illegal additions lightly.

David Dachtera · Answer

@Nathan Belete,

I would let go of that idea. None of the options you stated seem like they would produce a profit-producing unit and enhance the value of the property. Remember: up to 4 units is still considered residential and is valued by comparable sales. If you've got a white elephant like that, appraising it will be difficult so getting financing for an eventual buyer will be difficult.

Upgrade a property like that for resale value, not what you think you might get in income (you might not / probably won't).

My $0.02 ...

Account Closed · Answer

Well that is new information that changes everything!

Good luck to you both

Nate B. · Answer

@Steve Brezovec This is great info, thanks for sharing!!!

Given that the property is a duplex, its doesn't apply to my situation. However, this is great news and information that will come in handy when looking at properties. I don't normally consider investing in single family homes but this new zoning law just made them valuable, especially if an accessory structor already exists. Thanks for sharing this, very very very useful!!!

Nate B. · Answer

Account Closed

Thank you both for the replies. Since my wife and I are currently living in one of the unit and renting the other, even though option 2 costs 15K, we are leaning towards that. Our take is that we can both use that space as an office or study room. My wife runs a business and I am currently in grad school so I figure we would utilize the space for a few years until we buy something else.

I do hope that I can rent it out in the future as an office or maybe the zoning l aw in Oakland will change, given there is a housing shortage. I really do hate to go against what you experts are saying but I feel that the utility we get from using the shed far out ways the cost given the amount of time we plan to stay there.

Steve Brezovec · Answer

Hi Nathan, It may be moot to you at this point but of use to others referencing this thread in the future.

Secondary Dwelling Unit Interim Zoning Regulations Oakland, CA

West Oakland, Convert shed to a habitable space?

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