Separate electric meter at ADU & Duplex project - San Fernando

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Separate electric meter at ADU & Duplex project - San Fernando

Jay Dimacali
Specialist · Granada Hills, CA · Member since 2013 · 73 posts · 21 votes

Hello BP community,

I've got an ADU project where I'm almost done but right now I have the Los Angeles DWP saying I can have a separate meter for my ADU. The issue is that I have a duplex where the ADU is being built and I wanted to have 2 separate electric meters for the duplex (it obviously didn't have it before). They don't have separate addresses (previous owner never went through the process so I just note each place as "Unit A" and "Unit B.") The DWP meter spot person said each house needs its own address. My question is: Has anyone dealt with the LA DWP and gotten separate meters for a duplex, triplex, etc.? Anything that can be done 'quickly' to get an approval for separate meters?

Jay

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Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
4y

Not a direct answer to your question, but you know what happens down the road when you attempt to refinance, or a buyer attempts to buy using a vanilla mortgage, when it's a duplex with an ADU, right?

It's not directly relevant to your question, but I speak to a lot of people "too late," when they're trying to refi/sell, and their buyer pool is reduced to cash buyers only, thus reducing what they can sell it for by a very non-trivial amount (cash buyers tend not to be dumb, they know there's no actual bidding war now that folks getting mortgages are excluded, no matter what those preapproval letters say). If you've already factored that in, awesome, please disregard this post. 

If not, and if that's potentially concern to you then it might be worth looking into what it takes to make this property a full blown 3-unit property. 

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    4y

    Not a direct answer to your question, but you know what happens down the road when you attempt to refinance, or a buyer attempts to buy using a vanilla mortgage, when it's a duplex with an ADU, right?

    It's not directly relevant to your question, but I speak to a lot of people "too late," when they're trying to refi/sell, and their buyer pool is reduced to cash buyers only, thus reducing what they can sell it for by a very non-trivial amount (cash buyers tend not to be dumb, they know there's no actual bidding war now that folks getting mortgages are excluded, no matter what those preapproval letters say). If you've already factored that in, awesome, please disregard this post. 

    If not, and if that's potentially concern to you then it might be worth looking into what it takes to make this property a full blown 3-unit property. 

    3Reply
  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    4y
    Originally posted by @Jay Dimacali:

    Hello BP community,

    I've got an ADU project where I'm almost done but right now I have the Los Angeles DWP saying I can have a separate meter for my ADU. The issue is that I have a duplex where the ADU is being built and I wanted to have 2 separate electric meters for the duplex (it obviously didn't have it before). They don't have separate addresses (previous owner never went through the process so I just note each place as "Unit A" and "Unit B.") The DWP meter spot person said each house needs its own address. My question is: Has anyone dealt with the LA DWP and gotten separate meters for a duplex, triplex, etc.? Anything that can be done 'quickly' to get an approval for separate meters?

    Jay

    Jay, is your lot already zoned as a multi family (i.e. R1.5, R2, R3, or R4) or is it zoned as a single family lot (R1)? If it is R1, then you can not get a second address for the second unit, you can only get a second address for a detached ADU on R1 lots. Of course the new SB9 may be changing this. If you do have a multi family zoned lot but the previous owner added the second unit without proper permits, you can get it permitted and with a new second address. Then you can also get another address for the ADU.

    Yes, you can have separate meters for each unit but ONLY if each unit is permitted with a C of O (Certificate of Occupancy).

    @Chris Mason - What you posted is referring to single family dwellings. Under the ADU laws currently in CA you can add ADU's onto multi family lots as well as convert non livable space (car ports, garages, breezeways, etc. into livable space so long as you meet fire code/egress rules). Could you explain more clearly what you mean that investors cant refi on multi family with ADU's? Never heard of that here.

    Podcast Guest on Show #130
    1Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    4y
    Originally posted by @Will Barnard:
    Originally posted by @Jay Dimacali:

    Hello BP community,

    I've got an ADU project where I'm almost done but right now I have the Los Angeles DWP saying I can have a separate meter for my ADU. The issue is that I have a duplex where the ADU is being built and I wanted to have 2 separate electric meters for the duplex (it obviously didn't have it before). They don't have separate addresses (previous owner never went through the process so I just note each place as "Unit A" and "Unit B.") The DWP meter spot person said each house needs its own address. My question is: Has anyone dealt with the LA DWP and gotten separate meters for a duplex, triplex, etc.? Anything that can be done 'quickly' to get an approval for separate meters?

    Jay

    Jay, is your lot already zoned as a multi family (i.e. R1.5, R2, R3, or R4) or is it zoned as a single family lot (R1)? If it is R1, then you can not get a second address for the second unit, you can only get a second address for a detached ADU on R1 lots. Of course the new SB9 may be changing this. If you do have a multi family zoned lot but the previous owner added the second unit without proper permits, you can get it permitted and with a new second address. Then you can also get another address for the ADU.

    Yes, you can have separate meters for each unit but ONLY if each unit is permitted with a C of O (Certificate of Occupancy).

    @Chris Mason - What you posted is referring to single family dwellings. Under the ADU laws currently in CA you can add ADU's onto multi family lots as well as convert non livable space (car ports, garages, breezeways, etc. into livable space so long as you meet fire code/egress rules). Could you explain more clearly what you mean that investors cant refi on multi family with ADU's? Never heard of that here.



    When Fannie/Freddie say "single family," they mean 1-4 unit, that's why you see references to 2-4 unit real estate under that 'singlefamily' url here, for example. 5+ is what they call "multifamily."

    Fannie/Freddie do not really care about California laws. California could legalize building an airplane factory in your suburban single family house, that doesn't mean Fannie is going to back a residential loan on it. None of the California state legislature folks, or the lobbyists, checked with Fannie/Freddie when passing all those new ADU laws a couple years back.

    If something doesn't meet Fannie requirements, then you and/or your buyers don't get to get a Fannie loan on it (though they generally will not call an existing loan due). No sexy 30yf with low fees. But if you had a rich uncle, or a hard money lender, etc, you could still get a loan on it - from that rich uncle, or from that hard money lender. 

    2 unit property with an ADU = no Fannie loan.

    3 unit property = Fannie Mae eligible. 

    There are certainly examples that sneak through. Maybe the day the appraiser shows up, the ADU looks and feels like a storage shed (and so on). You can also do commercial financing, etc.

    1Reply
  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    4y
    Originally posted by @Chris Mason:
    Originally posted by @Will Barnard:
    Originally posted by @Jay Dimacali:

    Hello BP community,

    I've got an ADU project where I'm almost done but right now I have the Los Angeles DWP saying I can have a separate meter for my ADU. The issue is that I have a duplex where the ADU is being built and I wanted to have 2 separate electric meters for the duplex (it obviously didn't have it before). They don't have separate addresses (previous owner never went through the process so I just note each place as "Unit A" and "Unit B.") The DWP meter spot person said each house needs its own address. My question is: Has anyone dealt with the LA DWP and gotten separate meters for a duplex, triplex, etc.? Anything that can be done 'quickly' to get an approval for separate meters?

    Jay

    Jay, is your lot already zoned as a multi family (i.e. R1.5, R2, R3, or R4) or is it zoned as a single family lot (R1)? If it is R1, then you can not get a second address for the second unit, you can only get a second address for a detached ADU on R1 lots. Of course the new SB9 may be changing this. If you do have a multi family zoned lot but the previous owner added the second unit without proper permits, you can get it permitted and with a new second address. Then you can also get another address for the ADU.

    Yes, you can have separate meters for each unit but ONLY if each unit is permitted with a C of O (Certificate of Occupancy).

    @Chris Mason - What you posted is referring to single family dwellings. Under the ADU laws currently in CA you can add ADU's onto multi family lots as well as convert non livable space (car ports, garages, breezeways, etc. into livable space so long as you meet fire code/egress rules). Could you explain more clearly what you mean that investors cant refi on multi family with ADU's? Never heard of that here.



    When Fannie/Freddie say "single family," they mean 1-4 unit, that's why you see references to 2-4 unit real estate under that 'singlefamily' url here, for example. 5+ is what they call "multifamily."

    Fannie/Freddie do not really care about California laws. California could legalize building an airplane factory in your suburban single family house, that doesn't mean Fannie is going to back a residential loan on it. None of the California state legislature folks, or the lobbyists, checked with Fannie/Freddie when passing all those new ADU laws a couple years back.

    If something doesn't meet Fannie requirements, then you and/or your buyers don't get to get a Fannie loan on it (though they generally will not call an existing loan due). No sexy 30yf with low fees. But if you had a rich uncle, or a hard money lender, etc, you could still get a loan on it - from that rich uncle, or from that hard money lender. 

    2 unit property with an ADU = no Fannie loan.

    3 unit property = Fannie Mae eligible. 

    There are certainly examples that sneak through. Maybe the day the appraiser shows up, the ADU looks and feels like a storage shed (and so on). You can also do commercial financing, etc.

    Interesting. I have sold properties (single family - R1) with an ADU and buyers had no problems, though they were conventional with 20%+ down.

    Podcast Guest on Show #130
    0Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    4y
    Originally posted by @Will Barnard:
    Originally posted by @Chris Mason:
    Originally posted by @Will Barnard:
    Originally posted by @Jay Dimacali:

    Hello BP community,

    I've got an ADU project where I'm almost done but right now I have the Los Angeles DWP saying I can have a separate meter for my ADU. The issue is that I have a duplex where the ADU is being built and I wanted to have 2 separate electric meters for the duplex (it obviously didn't have it before). They don't have separate addresses (previous owner never went through the process so I just note each place as "Unit A" and "Unit B.") The DWP meter spot person said each house needs its own address. My question is: Has anyone dealt with the LA DWP and gotten separate meters for a duplex, triplex, etc.? Anything that can be done 'quickly' to get an approval for separate meters?

    Jay

    Jay, is your lot already zoned as a multi family (i.e. R1.5, R2, R3, or R4) or is it zoned as a single family lot (R1)? If it is R1, then you can not get a second address for the second unit, you can only get a second address for a detached ADU on R1 lots. Of course the new SB9 may be changing this. If you do have a multi family zoned lot but the previous owner added the second unit without proper permits, you can get it permitted and with a new second address. Then you can also get another address for the ADU.

    Yes, you can have separate meters for each unit but ONLY if each unit is permitted with a C of O (Certificate of Occupancy).

    @Chris Mason - What you posted is referring to single family dwellings. Under the ADU laws currently in CA you can add ADU's onto multi family lots as well as convert non livable space (car ports, garages, breezeways, etc. into livable space so long as you meet fire code/egress rules). Could you explain more clearly what you mean that investors cant refi on multi family with ADU's? Never heard of that here.



    When Fannie/Freddie say "single family," they mean 1-4 unit, that's why you see references to 2-4 unit real estate under that 'singlefamily' url here, for example. 5+ is what they call "multifamily."

    Fannie/Freddie do not really care about California laws. California could legalize building an airplane factory in your suburban single family house, that doesn't mean Fannie is going to back a residential loan on it. None of the California state legislature folks, or the lobbyists, checked with Fannie/Freddie when passing all those new ADU laws a couple years back.

    If something doesn't meet Fannie requirements, then you and/or your buyers don't get to get a Fannie loan on it (though they generally will not call an existing loan due). No sexy 30yf with low fees. But if you had a rich uncle, or a hard money lender, etc, you could still get a loan on it - from that rich uncle, or from that hard money lender. 

    2 unit property with an ADU = no Fannie loan.

    3 unit property = Fannie Mae eligible. 

    There are certainly examples that sneak through. Maybe the day the appraiser shows up, the ADU looks and feels like a storage shed (and so on). You can also do commercial financing, etc.

    Interesting. I have sold properties (single family - R1) with an ADU and buyers had no problems, though they were conventional with 20%+ down.

    SFRs w/ADUs have no problems being financed; they are financed (at the point of purchase) no differently than any other SFR.

    0Reply
  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    4y
    Originally posted by @Chris Mason:
    Originally posted by @Will Barnard:
    Originally posted by @Chris Mason:
    Originally posted by @Will Barnard:
    Originally posted by @Jay Dimacali:

    Hello BP community,

    I've got an ADU project where I'm almost done but right now I have the Los Angeles DWP saying I can have a separate meter for my ADU. The issue is that I have a duplex where the ADU is being built and I wanted to have 2 separate electric meters for the duplex (it obviously didn't have it before). They don't have separate addresses (previous owner never went through the process so I just note each place as "Unit A" and "Unit B.") The DWP meter spot person said each house needs its own address. My question is: Has anyone dealt with the LA DWP and gotten separate meters for a duplex, triplex, etc.? Anything that can be done 'quickly' to get an approval for separate meters?

    Jay

    Jay, is your lot already zoned as a multi family (i.e. R1.5, R2, R3, or R4) or is it zoned as a single family lot (R1)? If it is R1, then you can not get a second address for the second unit, you can only get a second address for a detached ADU on R1 lots. Of course the new SB9 may be changing this. If you do have a multi family zoned lot but the previous owner added the second unit without proper permits, you can get it permitted and with a new second address. Then you can also get another address for the ADU.

    Yes, you can have separate meters for each unit but ONLY if each unit is permitted with a C of O (Certificate of Occupancy).

    @Chris Mason - What you posted is referring to single family dwellings. Under the ADU laws currently in CA you can add ADU's onto multi family lots as well as convert non livable space (car ports, garages, breezeways, etc. into livable space so long as you meet fire code/egress rules). Could you explain more clearly what you mean that investors cant refi on multi family with ADU's? Never heard of that here.



    When Fannie/Freddie say "single family," they mean 1-4 unit, that's why you see references to 2-4 unit real estate under that 'singlefamily' url here, for example. 5+ is what they call "multifamily."

    Fannie/Freddie do not really care about California laws. California could legalize building an airplane factory in your suburban single family house, that doesn't mean Fannie is going to back a residential loan on it. None of the California state legislature folks, or the lobbyists, checked with Fannie/Freddie when passing all those new ADU laws a couple years back.

    If something doesn't meet Fannie requirements, then you and/or your buyers don't get to get a Fannie loan on it (though they generally will not call an existing loan due). No sexy 30yf with low fees. But if you had a rich uncle, or a hard money lender, etc, you could still get a loan on it - from that rich uncle, or from that hard money lender. 

    2 unit property with an ADU = no Fannie loan.

    3 unit property = Fannie Mae eligible. 

    There are certainly examples that sneak through. Maybe the day the appraiser shows up, the ADU looks and feels like a storage shed (and so on). You can also do commercial financing, etc.

    Interesting. I have sold properties (single family - R1) with an ADU and buyers had no problems, though they were conventional with 20%+ down.

    SFRs w/ADUs have no problems being financed; they are financed (at the point of purchase) no differently than any other SFR.

    I see, so you are saying that the issue arises when the property is a duplex with an ADU, Fannie/Freddie will not do the loan? That makes more sense and thanks for the info, I did not know that. That takes away what is currently a great option for the multi family (2-4 unit) properties regarding ADU's if you intend to refi or sell to a non all cash buyer. Ouch. As they say, the Lord giveth and the Lord taketh away.

    Podcast Guest on Show #130
    0Reply
  • Jonathan Taylor
    Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
    4y

    @Chris Mason SB13 allows for 2-4 units have ADUs. I know because I completely permitted an ADU on a triplex. Legal and compliant with LADBS.

    The issue is the refi (which I believe is what you meant). Fannie/Freddie DO NOT buy loans on MFs with ADUs. I don't know why for sure, my guess is the zoning compliance ( I called Fannie and asked, they simply said, they don't buy those loans) So the refi will be stuck in non QM with higher rates.

    @Will Barnard SFR with and ADU is Agency compliant but 2-4s are not.

    0Reply
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