San Diego Project Walk-through: 23 ADUS on a SFR Lot!?? Garage Conversion

[Mark Doty]

Investment Info:

Small multi-family (2-4 units) other investment.

Purchase price: $570,000

Commercial Multifamily Development. We are turning a single family residence into 23 apartments using the new ADU regulations in San Diego.

Join us for the Project Walk-throughs to hear about the project and network with other investors and professionals in the ADU space. Join the email list on our website to learn about the details. DotyCapitalGroup.com

What made you interested in investing in this type of deal?

San Diego is a unique market and difficult to cash flow because pricing is so high. However, the new ADU regulations allow investors to add units. When you focus on adding value and have the time (and capital) to build units, ADU deals pencil...even in California!

How did you find this deal and how did you negotiate it?

This was a distressed MLS deal. They wouldn't take my first offer but I stuck with it over time and asked the agent to represent my side of the deal in addition to the owner. Eventually, they came down a little bit and we came to terms.

How did you finance this deal?

This was financed with a hard money loan that had construction funds built-in. Phase three of the project will be funded with private investors and a construction loan.

How did you add value to the deal?

Entitlement is the key to ADU deals in San Diego. Identifying zoning where you can add more than 3 units and finding properties where it makes sense is not easy but is definitely worth it! I target multifamily zoning near the trolley or major bus stops.

What was the outcome?

Phase 1 (Rehab) is coming to a close in Q4 of 2023. It will be rented during the entitlement phase (most of 2024) and construction will follow. End results are TBD.