RECC: 5 ADU's on an Existing Property with CashFlow Permitting

[Andrew Greer]

The event "5 ADU's on an Existing Property with CashFlow Permitting" revolves around the development of five Accessory Dwelling Units (ADUs) on a property with existing structures. Here's a summary based on the provided information:

Property Overview:

• The property initially consisted of four units: three 1-bedroom units and one 3-bedroom unit.
• One of the 3-bedroom units was operated as an Airbnb while the 1-bedroom units were leased out long-term.
• The plan includes developing five new ADUs on the property:
• Two 2-bedroom units (planned for midterm)
• Three studios, two of which are deed restricted.

Financials:

• Purchase Price: $1.675 million
• Market Appraised Rental Value (MARV) after development: $4.5 million
• Estimated Build Cost: $825,000
• Estimated Permit/Design Costs: $120,000
• Rehabbed units cost: $210,000 (Note: unpermitted)
• Holding costs are currently covered by rents from existing units.

Challenges:

• Permitting has been a prolonged process, spanning 24 months, largely attributed to poor choices in architects.

Key Points:

• The event highlights the strategic addition of ADUs to enhance the property's value and cash flow potential.
• Despite challenges in permitting and potential concerns about unpermitted rehabbed units, the project is financially viable, with holding costs mitigated by existing rental income.
• The property's transformation is expected to significantly increase its market value, offering both short-term and long-term rental opportunities.

The event provides insights into navigating real estate development, emphasizing the importance of thorough planning, managing costs, and overcoming regulatory hurdles for successful project execution.