Land with ADUs

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Land with ADUs

Mitchell Gunlock
Vancouver, WA · Member since 2024 · 16 posts · 9 votes

What do you all think about buying undeveloped land and setting up ADUs to rent out? I'd only look at land that's at least connected to water and power and already has a septic plan in place.

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Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
2y
Quote from @Jonathan Greene:
Quote from @Mitchell Gunlock:
Quote from @Jonathan Greene:

It probably sounds easier than it will be in practice. It's technically not an ADU if it's the only property on land as it's an accessory dwelling unit to a main unit. You are talking more about a cottage cluster. You would want to check local zoning to make sure you could build more than one as a lot goes into that beyond just being close to plumbing, electric, and gas.


When you mention "a lot goes into that beyond just being close to plumbing, electric, and gas," what are the top things people tend to overlook when preparing to build ADUs?


Access roads and if multiple are needed for each unit.

City regulations and zoning.

Impervious cover requirements or percentage across the whole lot.

Drainage per units built.


 In some jurisdictions, off street parking can be a requirement.   I knew a developer before the exception for being near mass transit planned to build 4 units but was only able to build 3 units.   It heavily effected his under writing results.   If he was building it today, the parking would likely not be an issue.   In my market they keep reducing parking requirements while removing public parking.   This has mostly been for bike lanes but the most recent is a statewide prohibition on parking near cross walks.   The city is eliminating a significant amount of parking near the cross walks.   In many areas there is already not enough parking.   It is not uncommon to have to park blocks away from your residence.  At isle vista, my son skate boarded to his parked car because he sometimes was blocks from his residence.  

The ADU hurdles are jurisdiction specific.

Good luck

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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    2y

    It probably sounds easier than it will be in practice. It's technically not an ADU if it's the only property on land as it's an accessory dwelling unit to a main unit. You are talking more about a cottage cluster. You would want to check local zoning to make sure you could build more than one as a lot goes into that beyond just being close to plumbing, electric, and gas.

    [email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
    Zen and the Art of Real Estate Investing59 Reviews
    WebsiteView Page
    1Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    2y

    Build to rent (BTR) is being performed by various developers in various markets.   It can work in some markets.   

    ADUs implies there is a residential building to be an accessory to, but inn my market the accessories can be overwhelming to the primary structure.   In my market you can get an additional unit for each affordable rent unit.  

    The following land belonged to my initial protege.  I told him I was glad I did not live on that street.  I do not blame the developers.   I blame the politicians that create rules that allow this.   https://www.cbs8.com/article/news/local/working-for-you/new-...


    Good luck

    1Reply
  • Mitchell Gunlock
    OP
    Vancouver, WA · Member since 2024 · 16 posts · 9 votes
    2y
    Quote from @Dan H.:

    Build to rent (BTR) is being performed by various developers in various markets.   It can work in some markets.   

    ADUs implies there is a residential building to be an accessory to, but inn my market the accessories can be overwhelming to the primary structure.   In my market you can get an additional unit for each affordable rent unit.  

    The following land belonged to my initial protege.  I told him I was glad I did not live on that street.  I do not blame the developers.   I blame the politicians that create rules that allow this.   https://www.cbs8.com/article/news/local/working-for-you/new-...


    Good luck


    I know that area—space is limited. I see your point; adding more units could be worthwhile.

    0Reply
  • Mitchell Gunlock
    OP
    Vancouver, WA · Member since 2024 · 16 posts · 9 votes
    2y
    Quote from @Jonathan Greene:

    It probably sounds easier than it will be in practice. It's technically not an ADU if it's the only property on land as it's an accessory dwelling unit to a main unit. You are talking more about a cottage cluster. You would want to check local zoning to make sure you could build more than one as a lot goes into that beyond just being close to plumbing, electric, and gas.


    When you mention "a lot goes into that beyond just being close to plumbing, electric, and gas," what are the top things people tend to overlook when preparing to build ADUs?

    0Reply
  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    2y
    Quote from @Mitchell Gunlock:
    Quote from @Jonathan Greene:

    It probably sounds easier than it will be in practice. It's technically not an ADU if it's the only property on land as it's an accessory dwelling unit to a main unit. You are talking more about a cottage cluster. You would want to check local zoning to make sure you could build more than one as a lot goes into that beyond just being close to plumbing, electric, and gas.


    When you mention "a lot goes into that beyond just being close to plumbing, electric, and gas," what are the top things people tend to overlook when preparing to build ADUs?


    Access roads and if multiple are needed for each unit.

    City regulations and zoning.

    Impervious cover requirements or percentage across the whole lot.

    Drainage per units built.

    [email protected]Podcast Guest on Show BiggerPockets Daily 667: 5 Amazing Benefits Multifamily Investments Offer (That Single Family Homes Don’t) by Gino Barbaro
    Zen and the Art of Real Estate Investing59 Reviews
    WebsiteView Page
    1Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    2y
    Quote from @Jonathan Greene:
    Quote from @Mitchell Gunlock:
    Quote from @Jonathan Greene:

    It probably sounds easier than it will be in practice. It's technically not an ADU if it's the only property on land as it's an accessory dwelling unit to a main unit. You are talking more about a cottage cluster. You would want to check local zoning to make sure you could build more than one as a lot goes into that beyond just being close to plumbing, electric, and gas.


    When you mention "a lot goes into that beyond just being close to plumbing, electric, and gas," what are the top things people tend to overlook when preparing to build ADUs?


    Access roads and if multiple are needed for each unit.

    City regulations and zoning.

    Impervious cover requirements or percentage across the whole lot.

    Drainage per units built.


     In some jurisdictions, off street parking can be a requirement.   I knew a developer before the exception for being near mass transit planned to build 4 units but was only able to build 3 units.   It heavily effected his under writing results.   If he was building it today, the parking would likely not be an issue.   In my market they keep reducing parking requirements while removing public parking.   This has mostly been for bike lanes but the most recent is a statewide prohibition on parking near cross walks.   The city is eliminating a significant amount of parking near the cross walks.   In many areas there is already not enough parking.   It is not uncommon to have to park blocks away from your residence.  At isle vista, my son skate boarded to his parked car because he sometimes was blocks from his residence.  

    The ADU hurdles are jurisdiction specific.

    Good luck

    2Reply
  • Jonah SlovePro Member
    Member since 2023 · 77 posts · 53 votes
    2y

    I am working on an agritourism project with a primary home for myself and additional 5-6 or so cabins that will be BTR or ADUs. P and Z  is on board as this will increase the financial  sustainability of my small farm.

    0Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    2y

    You are basically building a new home on a piece of land. A couple of things to consider:

    1. You are subject to new building codes. I don't know what market you are looking in, but in California that would mean solar panels, rain barrels, fire sprinklers, etc. It ends up being very expensive.

    2. I would rather buy a property already built all day long and get it rented out immediately. If it takes 6 months to a year to build, that's tons of loss opportunity costs and carrying costs spent. 

    3. Where is the land located? Again, not sure on your market but if the empty lot is so far out of town, then who would be your tenant pool?

    4. What's your construction experience? This is a full time job to manage a project like this. That's why developers have project managers on top of the contractors. 

    I'm not saying don't do it, I'm saying think it through, especially if you are new to this.

    1Reply
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