Low Interest Rates, Higher and Higher Prices:
Multi-family property values are continuing to increase. Driven by low interest rates and an over-supply of capital in the marketplace, investors looking to grow via acquisition are forced to accept greater risk and lower yield. With a new acquisition comes new tenants, who may or may not have the ability to pay, and a new building with operational challenges to learn.
New Laws, New Opportunities:
New laws in California allow investors to grow from within their portfolio: reducing risk, improving their assets they know well, and most importantly, allowing them to underwrite and select their own, high-quality tenants at a time when people are being stretched financially.
Will My Property Qualify? There are 2 Options
- Conversion: ADUs can be “converted” from existing, non-living, spaces such as garages, carports, attics, basements, rec rooms, or storages rooms. These converted spaces must be able to be brought up to current health/safety building codes (fortunately the rest of the building does not!). Each property can convert 1 ADU per every 4 existing units with a minimum of 1. If you have a 7-unit building or less, you can convert 1 ADU. 8 units would allow for 2 ADUs, 12 units would allow for 3 ADUs, and so on.
- Open Space: If you have open space on your property you can build up to 2 (Yes – 2!) detached ADUs. These units are typically set up in the form of a side-by-side duplex. You can only build 2 new detached ADU units regardless of how big your lot is. These detached units are IN ADDITION TO other spaces that may be converted to ADUs.
What About Parking??
If you convert any existing space – including parking spaces – no additional or replacement parking is required. If you are within ½ mile of transit (bus stop), which most of LA County is, you do not have to provide any additional parking for detached ADUs.
How to Get Started:
If you have a multi-family property and are interested in adding an ADU, please give me a call.
My company specializes in working with multi-family owners to capitalize on this new ADU opportunity, providing end-to-end project advisory, management, and oversight to maximize the value of each project.
We bring all the pieces together take your project from initial concept to leased-up rental unit without you having to “take on” a construction project.
We can also help identify and execute on acquisition opportunities with ADU development potential. Please reach out if you are interested in acquiring multi-family assets.
Kyle Young, Managing Broker
3L Properties, Inc. (BRE 02025209)
213.291.0701 | [email protected]