ADUs in Northern California

[John Geary]

Wow have ADUs taken off in CA recently, especially with the recent changes to legislation. 

Curious question for investors out there: who has looked into modular prefab detached ADUs? I recently started focusing more on these structures and am interested to hear what investor focused homeowners think about these types of units. As an investor, what parts of the ADU puzzle are you looking to solve?

[Chris Mason]

Originally posted by @John Geary:

Wow have ADUs taken off in CA recently, especially with the recent changes to legislation. 

Curious question for investors out there: who has looked into modular prefab detached ADUs? I recently started focusing more on these structures and am interested to hear what investor focused homeowners think about these types of units. As an investor, what parts of the ADU puzzle are you looking to solve?

 To be honest, "investor focused homeowners" might not be the best pond for you to be fishing in. Find a barrel of homeowners who have owned in the Bay Area / NorCal for >10 years, and not had any mortgages recorded against the property in 5 years (you can buy such lists from your favorite title company). Those fish in that barrel will work out great for you, bang bang bang. They will work out great for me too, since the cash out refinance is needed for the cash needed to pay you.

The problem with that "investor focused" part of what you typed is that they just did a maxed-out cash out refi 6 months ago, and spent the proceeds on a down payment for something else. This works out quite well for me as well, but unfortunately for you, they largely do not have the equity to tap, they already used it for a duplex in Sacramento, a SFR in Stockton, etc. Any time someone starts researching "real estate investing," they come across terms like "Dead Equity" and other things compelling them to be perpetually as mortgaged to the hilt as possible, so if they find you via any SEO or marketing efforts involving or targeting "real estate" and "investing" next to each other, it's often going to be too late for you.

This is meant as productive feedback, please take it as such. You want homeowners, yes, but I suspect that the specific subset wouldn't be "investor focused" homeowners, it would be people that feel compelled by social justice or "doing the right thing" type motives to "do their part" to solve the housing crisis. That being said, feel free to prove me wrong (we really do need more housing, after all...), and good luck to you sir. :)

EDIT: Self selection bias note. Some people save up $200k when they want to buy a $200k thing. To those folks, I do not exist. They don't need me, they aren't calling me, I'm not talking to them, I cannot comment on their buying patterns.