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Updated about 5 years ago, 09/16/2019
Anyone with an ADU (Accessory Dwelling Unit) build experience?
I have a chance to buy in (via TIC) to what is basicly a 10' x 24' shed at an advantageous price that I've been given the verbal ok from SF Planning that would work for an ADU. I'd have to run sewer and all utilities to it, as well as do a studs down remodel (it actually has good bones and a reletively newer asphalt shingle roof). Assuming a $100K build/permitting budget, and 80% occupancy once it's done as an AirBNB rental, it "should" yield me almost 10%, and be a possible condo candidate in 2022 when the lottery opens again.
The question is, what pitfalls aren't I seeing here? I have a contractor (who doesn't know ADU law), a PM and cleaning crew lined up (I own other properties in The City, and have done VRBO in other houses, so I know those issues). What can SF Planning do to me to go back on their word? Any particular city inspector problems for these things?
Thanks in advance for any insight, I appreciate it!
Hi Bob,
the only pitfall I see is that the ADU process is very slow, our new mayor is trying to improve things but the last time I checked 4 months ago, the SFDBI was announcing 6-8 months wait to get the ADU permits approved. Also you probably want to work with an architect who has ADU experience I can recommend one if you want.
Here is a recent article with more information: http://www.sfexaminer.com/city-easing-onerous-approval-process-accessory-dwelling-units/
Great insight Guillaume, thank you! And yes, if you have an architect please forward me his info if you can, I would appreciate it. Going through an ADA issue with a front door on a retail place I own - I know the routine regarding "connections" in SF lol...
Are you buying just the shed? Or a tic unit that includes the shed? 240 sq ft is a small studio, so you need to compare your all in cost to it's potential value...I'd look at 15x GRM as a rental unit value, and possibly what it would sell for as a tic unit to an owner occupant. If there isn't significant equity value, I wouldn't bother, as getting an ADU completed in this city as a royal PITA.
An ADU can't convert to condo btw.
@Guillaume Carre. I am also thinking of adding an ADU and would be grateful if you can PM me with your architect that has ADU experience.
If condo conversion is your ultimate goal, you might run into trouble with ADU, as opposed to a regular cookie cutter duplex. Consult an attorney specialized in SF condo conversion
Be mindful with Airbnb as well. SF short term rental rules treat it as a separate unit, so you must rent for > 30 days for each reservation.
Contractors I've been speaking to have told me that ADU permits in the city are taking 12 to 18 months to get approved. I've been trying to get a permit on the Peninsula and my application has been sitting for 7 months and counting.
I am curious how much your $/square foot are estimated to be for your proposed ADU. I have gotten a couple of bids that are in the near $550/square foot which seems really high. I was expecting $400/ft but this is my first construction project. Are my expectations are just way off?
way
too
high
3words
I'm patient, and I know this is going to take over a year, but the cost of entry is painfully cheap, that's the only reason I'm considering this. And I think SF proper is 6-9 months right now, apparently Peninsula even crazier! And about $500/sq' is about what I have budgeted, which still makes this a no brainer.
Contractors I've been speaking to have told me that ADU permits in the city are taking 12 to 18 months to get approved. I've been trying to get a permit on the Peninsula and my application has been sitting for 7 months and counting.
I am curious how much your $/square foot are estimated to be for your proposed ADU. I have gotten a couple of bids that are in the near $550/square foot which seems really high. I was expecting $400/ft but this is my first construction project. Are my expectations are just way off?
Jeff Lee
On the contrary I spoke with an experienced General Contractor who said permitting shouldn't be that difficult, however I don't have any direct experience with permitting yet!
As for the ADU itself, I am beginning to look at Tuff Shed, apparently they build shells for ADU. Has anyone looked at it yet?
If I hire an architect to help design & permits, get the foundation done by a licensed contractor, have Tuff Shed build the shell (they install it too), and if you can hire out subs to finish up the rest like electrical, plumbing, HVAC, flooring etc.. would self managing the project work?
I did an excel calc based on the quotes I received and my prices are coming to about $300 per sq feet all inclusive. Perhaps I am over simplifying?
@Account Closed Permitting is the easy part if the designer does a good job designing, labeling, and filling out the correct forms, you will be out in 1 month. Now is that the case? Nope, usually, it takes 6-8 weeks to get approved.. city. County of los Angeles up to 4 months.
as far as shells compared to wood, wood will always outlast sheds plus it retains its value on Zillow and Redfin (ill share with you a posting i have were cheap material compared to great material can make a $100K difference.) in the long run.
unless you know the procedures and prior experience with the right "Subs" it can make a 4-month job turn to a 9-month horror.
and I think if you look into it a bit more you could get a better quote then $300 and have it done in 4 months without lifting a finger. Hope this helps
In SF, it has to be a building that is already in place if it's over 100 sq', which this is. I would avoid a Tuff Shed to be honest, pouring a slab and framing up a tiny house would probably not be that much more, and it would add more to the value of the main living quarters.
Originally posted by @Account Closed:
On the contrary I spoke with an experienced General Contractor who said permitting shouldn't be that difficult, however I don't have any direct experience with permitting yet!
As for the ADU itself, I am beginning to look at Tuff Shed, apparently they build shells for ADU. Has anyone looked at it yet?
If I hire an architect to help design & permits, get the foundation done by a licensed contractor, have Tuff Shed build the shell (they install it too), and if you can hire out subs to finish up the rest like electrical, plumbing, HVAC, flooring etc.. would self managing the project work?
I did an excel calc based on the quotes I received and my prices are coming to about $300 per sq feet all inclusive. Perhaps I am over simplifying?
Are you buying just the shed? Or a tic unit that includes the shed as a “freebie”?
TIC that includes the shed (and what little yard there is) as a freebie...I'm taking the shed, my business partner will be taking the 1BR apartment to live in and oversee the short term rental that I'm looking to make the shed...
Originally posted by @Amit M.:
Are you buying just the shed? Or a tic unit that includes the shed as a “freebie”?
So how much are you paying for the shed?
Hi,
I'm an architect and my firm OpenScope Studio wrote the ADU handbook for the Planning Department. We're currently working on 30+ ADU projects in San Francisco, mostly in larger apartment buildings for corporate clients but we are doing a few in single family homes or duplexes too. I would say your cost estimate is way off, I haven't heard of anyone doing a project like that for $100k (granted I don't know the details) because construction on small projects is running $325 (at the EXTREME low end) and up - some other commenters have mentioned this as well.
The permitting timeline has improved substantially in recent months, both Planning and DBI have introduced new procedures. That being said it's at least 9 months to get a building permit if all goes smoothly.
If anyone has detailed questions feel free to contact me directly.
I will warn everyone: IF YOU PUT IN AN ADU YOU WILL NEVER BE ALLOWED TO AIRBNB IT! This is very clear in the law, and is not allowed under any circumstances. Do not believe real estate agents that may tell you otherwise. If you want to create a unit to Airbnb build an extra master suite with separate access but do not put in a kitchen or go the ADU permitting route with it.
@Mark Hogan are you talking about putting ADU's in existing basement spaces for $325 PSF? Is that cost so high because it includes significant structural (such as moving posts) or repairing foundations or lowering slabs? Because if you have an existing box and mainly running services, adding some interior walls to create rooms, etc., 325 seems kinda rich. OTOH local contractors are really pushing their prices these days. I liked dealing with them 2008-10, boy they sure were a lot more flexible then...kinda want to save my major renovations for the next recession :)
@Amit M. yes. I have not seen a single ADU project come in under that even with very minimal structural work. If you have not done construction in the Bay Area in a few years you are going to be in for an unpleasant surprise when you bid something out... prices are crazy right now. Things were VERY different in 2008-10.
Roughly speaking, about $150K, although it could take 6 months to get this consummated. I'm combing through ADU regs right now and seeing what is/isn't allowed, still interested at this price if I can't AirBNB it, as even allowing $500/sq' build cost, my total cost is about $250K.
One concern I'm having is the band of homeless that's taken over the corner a couple feet away, I know they can be transient (my family has been in The City for almost 100 years), could be a deal breaker if Mayor Breed continues encouraging homelessness as previous mayors have done.
Originally posted by @Amit M.:
So how much are you paying for the shed?
In order to build an ADU , you must live in one of the units
@Bob Johnson at 250k total cost to acquire and build it, you’re running up on $1000 PSF. Not a bargain IMO, as I’m not sure what the market value would be as a tic. 1- it’s really tiny, this isn’t HK, Singapore or even Manhattan and not a lot of tiny units trade hands in SF. 2- it really depends on things like the entrance to the unit, garden space, etc. in other words, if the access freely awkward, and there isn’t enough natural light, and it’s right up again st all the neighbors, it would be hard to sell it. As far as cashflow, it will cashflow even as a regular rental, but I’m not sure if it’s worth all the hassle.
Personally I don't like dealing with ADU's or in-laws unless I can make several hundred in equity off the bat. Too much hassle! I think a lot of owners are finding that out, especially at a ridiculous $350 PSF build out cost. In my case I'm legalizing several existing inlaws. I effectively paid little for the illegal units when I brought the buildings (say $200 PSF), but the square footage is good, they have respectable enterances, decent light, amenities, etc. so it's worth the hassle of dealing with the city. And it's not just the planning dept. Fire dept can be really random and onerous. And then dealing with the DBI inspectors, they are clueless about these new initiatives, and act like everything is standard new construction. Had to fight tooth and nail to allow some existing stuff to be ok as is. Thank god I have a couple more to do. I made some mistakes on the first one, and now know how to position and deal with city inspectors for the next ones so they go much smoother.
I'm looking at doing an ADU up in the Napa Valley, it seems to be a good opportunity right now for areas with restricted housing supplies and steep prices. I've been looking at an outfit called North Coast Packaged Homes (is it kosher to mention them? I've got no financial interest). They have pre-engineered homes in the 650-900 foot range that are pretty cost effective. My family is involved in the trades and and I've heard of $850-1,000 per square foot up here. That said these projects are usually top shelf everything.
@Amit M. - That's all excellent info, thank you!
There are a couple extenuating circumstances too - I'm actually helping my partner out buying his first place, so there is the "doing him a solid"-angle, despite my rule of NO BUSINESS WITH FAMILY OR FRIENDS. Lol.
Back to the unit though, it's separate from the main building, has it's own entrance off a pathway, actually WAS a "house" at one time (see:
https://sf.curbed.com/2015/2/24/9988502/rememberin...) before it was moved to this lot, has it's own dedicated yard, I have a reasonably priced contractor that I took care of in 2008 that makes sure I'm taken care of first when there's work, and my business partner will handle almost all the city paperwork. And it looks like I can raise the roof some, so installing a loft will add another 50+ feet of interior space.
In general though, I'm not buying anything in California, I'm actually trying to ready a couple of my places here in San Diego for sale, this was a one-time event, and in the end, the seller is dragging his feet not, it might not even happen lol...
@Ryan Heywood - Up there it will all have to do with the city planning dept and the NIMBYism of your neighborhood. Love the idea though!
As it turned out, the deal went sideways as the owner of the multiunit has been getting a little weird with the terms - he thinks he's still getting 2017 money for the place, and the price keeps rising as the hard money he used to buy is robbing him blind, he doesn't realize he's going to get crushed.
That being said, I might send a message to the note holders and let them know I'm interested in the whole building once he stops paying them lol...