California and Senate Bill 1069. How It May Impact Real Estate

By
Real Estate Broker/Owner with CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments 521400, 1501015, 01795582

California

Senate Bill 1069

 

How It May Impact Real Estate?

 

 

NOTE: If you are a stakeholder on this topic please be sure to log onto all the links as they are a blow by blow breakdown of this new law.

 

I have recently been posting about the somewhat controversial and often  confusing Senate Bill 1069; The California State Mandate that went into effect on January 1, 2017.

 

SB 1069 is a new LAW, or in most instances the re-definition of ACCESSORY DWELLING UNITS (ADU's) aka GRANNY FLATS, GARAGE APARTMENTS and/or  GARAGE CONVERSIONS, CASITAS, 2ND UNITS, etc.

 

What is an ADU

An "ADU" was originally defined as a secondary dwelling unit with complete independent living facilities for one or more persons and generally takes three forms:

  •  Detached: The unit is separated from the primary structure

  •   Attached: The unit is attached to the primary structure

  •   Repurposed Existing Space: Space (e.g., master bedroom) within the primary residence is

    converted into an independent living unit

  •   Junior Accessory Dwelling Units: Similar to repurposed space with various streamlining measures 

 

 

 

Under this bill/law the California Department of Housing and Community Development (HCD) regulates and maintains compliance Statewide for all Cities and Counties within the State of California for the governance and enforcement of SB 1069.

 

 

For those of you who've had the opportunity to dramatically impact the property value or, in some instances, even serve to help facilitate a sales transaction on a property that would not comp this could definitely be good news for you.

 

 

As a contractor and a real estate broker (temporarily down for redesign) I can personally atest to the fact that by adding an ADU or an JADU to your property you can often increase not only the value but the net equity.

 

Case in point: We had a client who's home could only appraise, based on local comps, at $900,000 which wasn't high enough to qualify for an 80% reverse mortgage.

By adding a 1bdrm. 600sf ADU for $300,000 the home then appraised for 1.4m. Adding the $300,000 ADU yielded an additional $200,000 in net equity and easily qualified the buyers for an 80% loan plus a revenue producing asset which enhanced their cash flow and ROI.

 

 

That stated it is also important to consider the cost per sf in the area. The formula that works best for this scenario was the fact that this particular property was in an area where most homes appraised from $600 to $3000/sf. easily elevating the property to a much higher value. 

 

I don't expect this to resonate with all RE Professionals or Industry Stakeholders on this platform. But for those that it does hit a nerve with please feel free to reach out to me anytime. 

 

 

Posted by

Why To Choose Us?

John DL Arendsen, Broker, General & Manufactured Home Contractor and Dealer 

TAG Real Estate Sales & Investments

TAG (The Arendsen Group) Real Estate Sales & Investments is a full service, one-stop, turnkey, family owned and operated real estate brokerage, General Contractor, Manufactured Home Contractor, Developer, Investor, Property Manager, Interior Design, Engineering, architectural, Landscape design, Expert Witness, Consulting, Curative Title and Troubleshooting company with over 100 years of combined experience in the San Diego real estate sales, construction, design & development arena.

 

 

 

 

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Comments (25)

Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • GRI • HAFA • PSC Calabasas CA

It does not have any sense to make a modification/addition of your home a DIY weekend project( as you mentioned, a licensed contractor would suggest against it) , and than to have a city inspector knocking your door with a request to remove whatever you did. 

Mar 15, 2017 02:42 PM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Happens all the time Inna Ivchenko That's one of the main reasons they imposed SB 1069. To bring non conforming or non permitted as builts up to code.

Mar 15, 2017 02:59 PM
Myrl Jeffcoat
GreatWest Realty - Sacramento, CA
Greater Sacramento Real Estate Agent

With so many looking into the possibility of adding such a structure for the purposes you outline, this bill is of interest.

Mar 15, 2017 04:21 PM
John DL Arendsen

And you're in a perfect area Myrl Jeffcoat 

Mar 15, 2017 05:15 PM
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

I sure do like your values out in CA. Here in NH the average house can be $275,000. We have "in-law" apartments and many town that do not allow 2 family homes, only allow if they do have a door connecting main living space to the accessory apt. I am going to have to put some research to values here for such accessory spaces.

Mar 15, 2017 04:43 PM
John DL Arendsen

It's all about comps and construction costs Scott Godzyk 

Mar 15, 2017 05:16 PM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

John, Thank you for that informative post.  It definitely is a sign of the times.  Wishing a great Wednesday evening.  A

Mar 15, 2017 04:56 PM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Thank you so much for the kind words Ron and Alexandra Seigel Right back atcha!

Mar 15, 2017 05:17 PM
Benjamin Kimmich
AVAVA Systems - Alameda, CA
Prefab Home Mfg specialized in Micro Homes and ADU

Great post John! And what a gorgeous house! ;-)

Backyard homes are indeed one of the easiest ways of adding much needed homes to our communities. They are also a great investment for home owners. Thanks for the info!

Mar 15, 2017 06:27 PM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Benjamin Kimmich 

 

Mar 15, 2017 08:19 PM
Jim Paulson
Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID
Owner,Broker

Here in Boise, Idaho; I am seeing an increase in demand for multi-generational housing!  Why spend $5-10K a month housing a family member in a semi assisted living facility when you can build an ADU for so much less and help take care of them yourself while giving them the privacy and autonomy they deserve/want?

 

Mar 15, 2017 11:23 PM
Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
The right Charlotte REALTOR!

In Charlotte, we are seeing an increased demand for ADUs as well - in fact, for about the past 5-6 years, they've been a necessity for many multi-generational families.  And, you're right - it's instant ROI for home sellers when added.  For buyers, it's a huge savings compared to the cost of putting a loved one in a retirement facility.  I wonder how soon NC & SC will follow California's lead on this bill.  

I will have to say, the photos of my ADUs that I've sold here do not compare to the one you show here!  Great shot!

Mar 16, 2017 05:05 AM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Aging in place is the mantra of our time for most folks Jim Paulson It's also a great place for your fledgling millineals and a good solid revenue producer.

Mar 16, 2017 07:05 AM
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

Interesting John DL Arendsen and now I have a preview of the meeting to come. Be sure to organize that with Jeff Dowler and I soon.

Mar 16, 2017 07:06 AM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

New trends tend to move from West to East Debe Maxwell, CRS and with our aging population, fledgling Millineals and the need for additional revenue streams and solid ROI it's kind of a no brainer.

Mar 16, 2017 07:08 AM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Already contacted both Jeff Dowler and Bill Roberts Thomas J. Nelson, Realtor, CRS If you know of anyone else that would like to join us feel free to do so. I'll tag Melissa Zavala and a few other as they come to mind. This is definitely a topic worth sharing. I'll also tag, Benjamin Kimmich, CEO of AVAVA Systems LLC. He'll be in town around the 27th-29th.

Also one of the reasons I'd like to speak with you separately about podcasts perhaps another time as it may not be a fit for our get together.

Mar 16, 2017 07:25 AM
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets

2 suggestions.


1. Call me anytime to chat about Podcasting. Let's also brainstorm an angle to get you on as a guest: construction & manufactured homes are great topics.


2. I can meet you early, before the other arrive and knock it all out in one sitting.


 

Mar 16, 2017 07:28 AM
Bob Crane
Woodland Management Service / Woodland Real Estate, EXP - Stevens Point, WI
Forestland Experts! 715-204-9671

Personally I like the idea of these little sub houses, but I do not know of any municipalities that allow them around here.

Way to much government intrusion in our lives, really need to fire some of these people.

Mar 17, 2017 07:56 PM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Got that right Bob Crane I think the main reason HCD got behind this is because they were realizing such shortfalls given Manufactured Housing is on its ars in Cali and they needed to reinvent themselves. It's really just all about $$$

Mar 18, 2017 06:47 AM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

This is an interesting bill I've been following, though it doesn't affect me (yet).

Mar 19, 2017 06:02 PM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

With all those beautiful wide open spaces and your sparse popuation I doubt you folks will have to worry about it anytime soon Nathan Gesner 

Mar 19, 2017 06:46 PM
Caroline Gerardo
Sun West Mortgage Corporation - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

Reading, listening, cooking up ideas. . .  

Mar 24, 2017 12:51 PM
John DL Arendsen

Let me know if I can help Caroline Gerardo 

Mar 24, 2017 01:17 PM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Well John DL Arendsen I am excited about this. Thanks for thinking of me.

And thanks for the call.

Now don't be greedy. I want in on this.

Bill Roberts

Mar 25, 2017 10:00 AM