Garage vs. ADU Conversion

[Gabriel Mauser]

Hi BP San Diego. Thank you to everyone in the forums as I have learned a lot from reading all of your experiences and contributions! I am working on my first investment property in Bay Park and I was hoping to get the opinion of other San Diego investors. The property has a long driveway and a two-car garage behind the main house; which will be a 4bed/3bath home after the remodel. 

I was wondering what option would be more valuable for the res-sale of the home.

Option 1: Take advantage of the long driveway and convert the two-car garage into a studio or 1bed 1 bath space.

or

Option 2: Keep the two car garage.

I also considered finalizing the permits for the ADU space (since I will already by waiting on permits for the main home) and leaving it as a blank "ADU ready" with adequate structural, plumbing and electrical for the future buyer to complete if they wish.

Thank you everyone for your opinions and I look forward to being a part of the BP community!

Gabe  

[Dan H.]

SFH with ADU will not be valued via an income approach if the buyer is using conventional financing.

My view is that Bay Ho likely does not have enough ADU comps and an ADU addition will not add as much as a hands off ADU garage conversion addition. This was true before the material inflation, but more so now that the material inflation has cause the garage ADU conversion to increase in costs significantly.

Before proceeding with the garage ADU conversion make sure you can find multiple comps that show that it is a value add proposition. It is my belief that you will not be able to find these comps and the garage conversion will be valued significantly less than the costs of the garage ADU conversion.

Good luck