Can you BRRRR with an unpermitted ADU? Will the appraiser call it

[Joe Vahedi]

Can you BRRRR with an unpermitted ADU? Will the appraiser call it out? What if the contractors did a great job? Is this a gray area? I have a client who wants a home, its been flipped, there is a 1200 SF adu, its one room, with bathroom, wants to build out walls and kitchen without permits... and then wants to BRRRR. Its for a long term rental. I am telling him BRRRR wont work most likely since it is not on the tax records as 2 SFR on the same lot. Also a detached garage is there with 1 bedroom that we could convert into 3rd ADU.. this is in San Diego county

[Dan H.]

The current ADU regulations includes a provision for an unpermitted structure being converted to an ADU (SB13). Basically it dictates that such a structure would only need to address items related to health and safety. This policy is in effect only for 5 years.

Therefore my suggestion is your client first determine exactly what is required to get the existing ADU converted to a legal, permitted ADU. Ideally this can be done at a reasonable cost and results in significantly more value than the cost.

The current regulations allow a JADU, an ADU, and the original SFR. Therefore, the 3 units is not an issue.

I suggest both you and your client research the 6 existing CA ADU bills. Currently a jurisdiction can mandate a property with a JADU have a unit on the property be occupied by the owner. I expect this restriction will be eliminate within a year but there is some risk assuming this.

Good luck