All Forum Posts by: Brian Larson

At the beginning of 2018, California passed a state standard for Accessory Dwelling Units (ADUs). This law wiped the slate clean of the patchwork of regulations throughout the state. The legislature claims to have passed this new law to help mitigate the housing crisis in California. Since these legal changes took place, many city building departments have been flooded with requests for ADU Projects.

Has anyone on BP looked at the financial numbers for building an ADU in a metro area in California to get a positive cashflow? It seems like it might be a good real estate investment strategy.

For example, if someone were to buy a distressed metro property in Downtown Sacramento. You could remodel the house and then build an ADU. This would essentially create a duplex without all the red tape. But do these financials makes sense?

I think this investment strategy is hard to evaluate because there is little historic data on ADUs.  Furthermore, appraisers often have issues evaluating the value of properties with ADUs.

Does anyone on BP have any advice or experiences that they could share on this ADU investment strategy idea?

Wow!  A property completely transformed -- inside and out.  Thanks for sharing.

@Pete Tam and @Account Closed -- Remember, the best way to make money in real estate is at the time of purchase.  If you buy for appreciation or tie-up large amounts of capital with only a small cashflow, you will live to regret it.

I am also very interested in learning more about people's ADU experiences. I am securing financing now to build a detached 2nd floor ADU above my garage in downtown SJ (Northside Neighborhood).

@Nicole Obregon Nope. If you bend some of your standards you are asking for trouble down the line.

@Chris Mason Thanks for the insider information from your experiences.

@Saj Shah Thanks for the reply. I figured that there was still some opportunities out there but there are less than there were a few years back. I’ll keep looking for some of the off market listing opportunities.

Anyone out there still finding deals in the SF Bay Area? If so, are you finding any on the MLS? Or are they all coming from pocket listings and wholesalers?

@Joshua D. I believe it. There are lots of deals out there. My wife and I bought our current home for at least $200K under the market 2 years ago. It was a similar case where the folks inheriting didn’t need the money and just wanted it sold on their terms without a bunch of hassle.