Adding ADUs to Multifamily in California

[Steve Buchanan]

Does anyone have experience adding ADU's to 5+ unit multifamily buildings in Los Angeles or elsewhere in California? I see deals highlighting this as a potential option, I'm just curious if once completed how lenders will perceive them. For example taking a 6 unit building and converting 2 garages into studios. Will lenders now see this as 8 units and count the full income of the new studios?

[Shiva Bhaskar]

Hi Steve, we buy 5+ unit multifamily in LA. Lenders are typically treating these as additional units, and counting them towards the property income. I would check with your mortgage broker as to how their lenders see these, but most of the lenders we spoke to are treating it as income and another unit.