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

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. 

 

 

Why To Choose Us?

John DL Arenden, Broker 

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.

 

 

 

 

SUBSCRIBE TO MY BLOG VIA EMAIL: Enter your email address:

Delivered by FeedBurner

 

 

Comment balloon 25 commentsJohn DL Arendsen • February 19 2017 04:50AM

Comments

Great overview of 1069 John.  Amazing pictures!  I think we're going to start seeing a lot of these with an aging majority of our population, tighter family budgets, and young adults living at much much longer. 

Posted by DAVID RAINE, Real Estate Social Media Automation (5 Minute Inc.) 7 months ago

Homeowners often try to expand their living spaces, but the key to do it right: get all permits and all necessary documents prior to modifications and additions. . 

Posted by Inna Ivchenko, Realtor® • Green • GRI • HAFA • PSC Los Angeles CA (Barcode Properties) 7 months ago

Spot on my DAVID RAINE . Looking forward to our meeting next week.

Posted by John DL Arendsen, Crest Backyard Homes designer & builder of ADU's (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) 7 months ago

As a licensed general and manufacured home contractor I can't and don't do it any other way Inna Ivchenko 

Posted by John DL Arendsen, Crest Backyard Homes designer & builder of ADU's (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) 7 months ago

Good afternoon John,

Looks better than the two boats that will be my living quarters for a while!

Make yourself an astonishing day.

Posted by Raymond E. Camp, Licensed Real Estate Salesperson Greater Rochester (Howard Hanna Real Estate Services) 7 months ago

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. 

Posted by Inna Ivchenko, Realtor® • Green • GRI • HAFA • PSC Los Angeles CA (Barcode Properties) 7 months ago

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.

Posted by John DL Arendsen, Crest Backyard Homes designer & builder of ADU's (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) 7 months ago

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

Posted by Myrl Jeffcoat, Greater Sacramento Real Estate Agent (GreatWest Realty) 7 months ago

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.

Posted by Scott Godzyk, One of Manchester NH's Leading Agents (Godzyk Real Estate Services) 7 months ago

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

Posted by Ron and Alexandra Seigel, Luxury Real Estate Branding and Marketing (Napa Consultants) 7 months ago

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

Posted by John DL Arendsen, Crest Backyard Homes designer & builder of ADU's (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) 7 months ago

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!

Posted by Benjamin Kimmich, Prefab Home Mfg specialized in Micro Homes and ADU (AVAVA Systems) 7 months ago

Benjamin Kimmich 

 

Posted by John DL Arendsen, Crest Backyard Homes designer & builder of ADU's (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) 7 months ago

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?

 

Posted by Jim Paulson, Owner,Broker (Progressive Realty (Boise Idaho) www.Progressive-Realty.info) 7 months ago

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!

Posted by Debe Maxwell, CRS, Charlotte Homes for Sale - Charlotte Neighborhoods (www.AtHomesCharlotte.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310) 7 months ago

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.

Posted by John DL Arendsen, Crest Backyard Homes designer & builder of ADU's (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) 7 months ago

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.

Posted by Thomas J. Nelson, Realtor,CRS,e-Pro, Co-Host of Mail-Right's: Real Estate Agent Podcast (Big Block Realty 858.232.8722) 7 months ago

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.

Posted by John DL Arendsen, Crest Backyard Homes designer & builder of ADU's (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) 7 months ago

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.

Posted by John DL Arendsen, Crest Backyard Homes designer & builder of ADU's (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) 7 months ago

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.

Posted by Bob Crane, Forestland Experts! 715-204-9671 (Woodland Management Service / Woodland Real Estate, Keller Williams fox cities) 7 months ago

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 $$$

Posted by John DL Arendsen, Crest Backyard Homes designer & builder of ADU's (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) 7 months ago

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

Posted by Nathan Gesner, Broker / Property Manager (American West Realty & Management) 7 months ago

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 

Posted by John DL Arendsen, Crest Backyard Homes designer & builder of ADU's (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) 7 months ago

Reading, listening, cooking up ideas. . .  

Posted by Caroline Gerardo, C. G. Barbeau the Loan Lady (Eagle Home Mortgage, LENNAR HOMES Home Loans) 7 months ago

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

Posted by Bill Roberts, "Baby Boomer" Retirement Planner (Brooks and Dunphy Real Estate) 7 months ago

Participate