An Oceanside apartment building is being expanded with the conversion of existing garages into accessory dwelling units – ADUs – in what is becoming a growing trend in San Diego County.
In the past, construction of the ADU’s, often called granny flats, were restricted to single-family homes but changes in state law allow multiple units to be added to existing apartment projects. The move is seen as an inexpensive way to quickly add new housing to the region.
Westview Real Estate in partnership with Matthew Pace and Pace Properties in January bought an apartment complex at 330 S. Horne St. for nearly $6.3 million and is renovating and the complex, adding ADUs, said Rob Perkins of Westview Real Estate.
The complex has existing 17 apartments. Nine garages at the rear of the complex are being converted into four ADUs as part of a $1.7 million renovation of the property, Perkins said.
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“We’re creating a tremendous amount of value by converting those garage spaces to more (apartment) units,” Perkins said.
As garages, the spaces might rent for about $100 a month, Perkins said.
As ADUs, Perkins said the monthly rates will range from about $1,500 to about $2,000.
Renovation of the existing apartments will include a complete overhaul of an interior courtyard, adding covered bicycle parking with hookups for electric bikes, and adding patios to some apartments.
“It was a bit dated so we’re going in in and updating all the units with new countertops, new cabinets, new flooring,” Perkins said “We’re putting washer-dryers in a majority of the units.”
Exterior work will include new landscaping, new lighting, and resurfacing the stucco on the front of the complex with new tile in the front entrance.
“The whole building is going to be repainted,” Perkins said.
Construction is expected to be finished by mid-2023, Perkins said.
Pace said finding a contractor is among the challenges in conversion projects like the one in Oceanside because they combine new construction with renovation.
“You have to find the right contractor who can work on small projects still having the knowledge of doing new construction. Perkins said that he and Pace are looking for more property that they can expand by adding ADUs.
“We’re targeting properties that have opportunities to convert either storage spaces, garages, or laundry rooms that can be turned into additional units,” Perkins said.
Projects like the Oceanside conversion are becoming increasingly popular since state laws were changed to encourage ADU construction as part of multi-family developments, said Caitlin Bigelow, co-founder of Maxable, a La Mesa company she started in 2018 to help people develop ADU’s.
Maxable does everything from evaluating property to determine if it’s suitable for a granny flat, designing it, getting required permits and recommending contractors to do the work.
“It’s something that’s still not widely known but we certainly are seeing some developers and investors taking advantage of that,” Bigelow said. “The process of converting multi-family property is a little more complicated than adding on one ADU.”
The complexity of adding ADUs “varies by jurisdiction. It depends on how knowledgeable the (city) staff is,” Bigelow said.
Perkins said that the City of Oceanside “was just amazing to work with.”
Rising interest rates have caused a bit of a slowdown in the development of ADUs, Bigelow said.
“ADUs are not cheap projects. Even a garage conversion is a six-figure project,” Bigelow said, but she said the effect of rising interest rates have been offset a bit by a California Housing Finance Agency program to offer grants to homeowners who build ADUs.
“This is one program that we’re seeing kind of counteract some of the higher interest rates,” Bigelow said.
Westview Real Estate
Headquarters: Del Mar Heights
Managing Partner: Rob Perkins, Managing Partner
Business: Real Estate Investment
Notable: Westview Real Estate has been actively investing in single-family and multi-family real estate in San Diego County since 2008.
Principal: Matt Pace
Business: Multi-family investor and developer
Contact: Matt Pace; firstname.lastname@example.org; 760-859-7989
Notable: Pace Properties focuses on non-institutional value-add property in Southern California and Arizona, investing to enhance the value of the multi-family property and the communities they serve.