On January 1st 2022, those living on certain single family home properties across California will have access to a new multi-family planning technique. SB 9 will allow the average homeowner to turn their single-family lot into four units by splitting their lot into two and building up to three additional units.
Say you own a one acre property in San Diego County. Here are your potential options (subject to each locality’s constraints):
For more information on SB 9 qualifications and requirements for San Diego area, click here for an application user guideopens PDF file from the San Diego County, Planning and Development Department.
The biggest hindrance to adding housing to your property currently is the high cost of capital to build in this hot housing market. Inflationary pressures on labor and material demand have led to skyrocketing new build prices. A 1,750 square foot single family home could cost upwards of $500,000 considering labor, materials and finishes in this market. A 900 square foot granny flat could cost over $250,000. For the average homeowner, coming up with the financing or capital to complete a project like this is certainly a detractor.
Alternatively, with the median home price in San Diego County above $800,000 at the end of 2021, building a rental unit on your property (rather than buying) could pencil out from a cash-on-cash return perspective.
If you are considering SB 9 to build on your property, please make sure you consult with a team of experts (e.g., architect, surveyor, contractor, mortgage broker, real estate broker, etc.) If you are looking for a dedicated San Diego Financial Advisor, who can assist you with comprehensive financial planning, including your housing development and investment goals, be sure to contact Dowling & Yahnke Wealth Advisors today.