All Forum Posts by: Felicia Nitu

When agents showcase a property's Development Opportunity, they open the door to a broader pool of buyers.

It’s not just investors and developers who pay attention, today’s homebuyers are increasingly curious about ways to build equity through expansion, ADUs, or redevelopment. Even buyers unfamiliar with development can be drawn in when the potential is clearly presented.

By positioning a listing as more than just a home, as a future project or investment, agents create urgency, increase desirability, and often attract more offers.

Bottom line? The more value you show, the more buyers you attract.

Accessory Dwelling Units (ADUs) have quickly become one of the most strategic ways to build wealth through real estate. As housing demand outpaces supply, ADUs offer a flexible and high-return path for homeowners, investors, and developers alike. 


Steady Income, Strong Demand

Detached ADUs of up to 1,000 square feet can bring in $2,000–$3,000 per month in rental income. With consistent occupancy and low vacancy rates, they’re a reliable source of long-term cash flow, especially in areas where larger rental units are in short supply.

Affordability Meets Opportunity

Emerging markets within 30 miles of major metro areas are ideal for ADU development. These locations offer lower land and construction costs while still benefiting from the rental demand driven by nearby cities. That means higher margins and less competition.

Why It Matters for Agents and Investors

For agents, ADUs present a chance to stand out by helping clients unlock new value in their properties, whether they're buying, selling, or exploring multi-generational living. For investors, ADUs are a scalable strategy that balances upfront cost with dependable income and long-term equity growth.

The bottom line? Whether you’re representing clients or building your own portfolio, ADUs are a smart move in today’s fast-moving market.

One of the key criteria under SB-423 is zoning. To qualify for streamlined residential development, a site must be zoned for residential or mixed-use. But there's more flexibility built in, thanks to recent legislation.

Per the Middle-Class Housing Act of 2022 (SB-6), sites zoned for office or retail may also qualify, as long as they meet specific criteria laid out under SB-6. This expands opportunities beyond traditional housing zones, opening the door to converting underused commercial sites into new housing.

Another key requirement: the site must have a general plan designation, meaning the local jurisdiction has officially mapped out the area’s intended use. This ensures that development aligns with citywide planning goals.

How Real Estate Agents and Investors Benefit:

For agents, this creates a new way to pitch sites that were once off the table. Vacant office parcels? Old strip malls? These can now be marketed as potential housing opportunities, especially in areas struggling to meet housing targets.

For investors, it broadens the field for acquisition. Properties that previously had limited utility can now become housing projects with less red tape, thanks to SB-423’s streamlined process. Combined with SB-6, this is a powerful tool for spotting hidden value in zoning maps.

SB-684 provides exciting opportunities for property development, but it's important to recognize that environmental factors can still impose restrictions. Specifically, properties designated as hazardous waste sites, wetlands, agricultural zones, or prime farmland face limitations. These areas typically cannot be subdivided or developed unless they are already designated for residential use or meet specific state safety requirements. This ensures that environmentally sensitive land remains protected, preserving its value for conservation and sustainability.

In addition, properties under conservation agreements or serving as wildlife habitats are usually exempt from development. This protects ecosystems and wildlife species, ensuring that essential natural resources are maintained for future generations.

For real estate agents and investors, understanding these restrictions is important. Agents benefit by guiding clients through these environmental limitations, helping them identify properties that meet the criteria for development under SB-684. This expertise can lead to better-informed decisions and more successful transactions. For investors, staying informed about these factors helps in evaluating potential risks and opportunities.

Under SB-9, you’re allowed to add 1 primary unit and 1 ADU on a single-family lot without needing to split the lot. That means you can develop 2 full units on the same parcel. No subdivision paperwork required!

A two-unit development simply means having 2 homes on one lot. This can be done in a few flexible ways:

– Keep your existing home and add a new single-family dwelling plus an ADU or JADU
– Or build a duplex and add 2 detached ADUs on the same property

This setup not only adds much-needed housing, but it also puts more function and value into the same property, all while keeping ownership simple.


Why This Matters for Agents and Investors
For real estate agents, this opens the door to new inventory strategies. Helping clients buy or sell properties with hidden development potential. For investors, it’s a chance to multiply income streams, especially in high-demand neighborhoods, without dealing with the cost or complexity of lot subdivision. SB-9 two-unit development is a clear, streamlined way to increase property value and create more housing, all on the same lot.

Most ADUs in California are designed with at least one bedroom and a full kitchen, offering a more spacious and functional living space.  On the other hand, JADUs, or Junior Accessory Dwelling Units, are typically smaller and designed with efficiency kitchens. These smaller units are ideal for individuals or couples seeking a cozy living space with fewer amenities.

What Sets Them Apart?

// Size & Layout
· ADUs: More living space, designed for long-term use
· JADUs: A small living space, 500 sq. ft. or less created within an existing single-family home

// Kitchen Setup
· ADUs: Full kitchen with a stove, oven, and refrigerator
· JADUs: Efficiency kitchen with a mini-fridge, microwave, and small stove

// Flexibility & Use
· ADUs: Standalone living spaces, great for rentals or multi-gen housing
· JADUs: Built within the main home, offering a cozy, space-saving setup

Each has its own advantages, choosing between them depends on space, budget, and long-term goals!

A Development Analysis for a lot split is an essential tool for evaluating the potential of subdividing a property under California’s SB-9 law. By assessing factors like zoning regulations, market demand, and nearby development activity, it provides a clear picture of what’s physically and legally possible on the site.

Under SB-9, a qualifying single-family lot can be divided into two separate parcels. Each resulting lot can support up to two residential units, allowing a total of up to four units across the original property. For example, a single-family home on a large lot could potentially be split into two parcels, with each parcel developed with a duplex or a house plus an ADU.

Understanding the number of allowable lots and units helps property owners and developers make informed decisions about whether a lot split is worth pursuing. It opens up financial benefits like creating additional buildable lots, new development options, and opportunities to add housing without needing a full rezoning.

Finding the right market for an ADU investment can make a huge difference in long-term profitability. Choosing a location with strong rental demand, low vacancy rates, and rising rents ensures that your ADU remains occupied and generates consistent income.

Markets near universities, business hubs, and job centers tend to offer the best potential for ADU investments. These areas attract tenants who are looking for affordable, well-located housing, making it easier to maintain high occupancy rates and command competitive rents.

A strong ADU market allows rental income to outpace inflation, providing financial stability and long-term returns. Reliable earnings and steady cash flow can help investors build wealth over time while offering landlords an additional source of income without taking on a full-scale development project.

For agents and investors, understanding market trends is key. Agents can identify high-potential locations and guide clients toward profitable investments, while investors can leverage the right market conditions to maximize returns. By targeting areas with strong ADU demand, both groups can capitalize on the growing need for affordable rental housing.

SB-423 is created to streamline housing approvals, but it only applies to infill sites. This means that for a project to qualify, at least 75% of its perimeter must be adjacent to developed urban areas.

This requirement ensures that new housing is built where infrastructure, utilities, and services are already in place, reducing the need for additional public investment. By focusing development in these areas, SB-423 helps speed up approvals, minimize environmental impacts, and make housing more accessible in growing communities.

For agents and investors, this creates significant opportunities. Agents can target areas that meet the criteria, helping clients navigate the approval process with confidence. 

Investors benefit from a clearer regulatory path, reducing risks and making projects more financially viable. 

With faster approvals and fewer barriers, SB-423 allows them to bring housing to market more efficiently, maximizing returns while contributing to much-needed urban development.

SB-9 or Senate Bill 9 gives homeowners the ability to split their lot into two and construct up to two homes on each, creating a total of four units. This law is mainly aimed at increasing housing density in residential neighborhoods while still maintaining a smaller-scale feel.

On the other hand, SB-684 or Senate Bill 684 is created to simplify the subdivision process for smaller lots, allowing them to be divided into as many as 10 separate parcels. This makes it easier to create multiple housing units by streamlining the approval process.

For real estate agents and investors, both laws offer significant advantages. SB-9 provides a way to maximize the potential of existing residential properties, increasing their value through additional housing. Meanwhile, SB-684 makes land subdivision more efficient, unlocking new development opportunities that were previously difficult to pursue. 

Understanding these differences can help professionals identify prime investment opportunities and navigate California’s evolving housing market more effectively.