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San Diego ADU Development

@maxitoutadu

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This is a new construction 9-unit project in North Park, San Diego. How do you estimate what it’s worth?

If each unit rents for about $2,400 per month, that’s:
9 units × $2,400 = $21,600 per month
× 12 months = $259,200 per year in gross income

Now we account for vacancy and operating expenses.

If we assume roughly 35% combined, that leaves us with about 65% of income as net operating income.

That gives us an NOI of around $168,000 per year.

For similar new construction in this area, let’s say it trades around a 5.3% cap rate.

$168,000 ÷ 0.053 = estimated $3.1M to $3.2M valuation.

That’s how commercial real estate investors quickly estimate value.
Income first.
Expenses second.
Cap rate last.

Follow for more real estate breakdowns and share this video with someone who could use it taken in North Park by @maxitoutadu

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4

7 months ago

From 1 unit to 9 units in University Heights, San Diego.

This property sold in July 2022 for $1,250,000 as a single-family home on a roughly 5,700 SF lot with RM1-1 zoning.

Now it’s in the construction phase and becoming a 9-unit property.

Here’s the breakdown:
• Existing main home
• Garage conversion
• (6) 1 bed units around 400 to 450 SF
• (1) 745 SF 2 bed with a deck

The lot is not huge, but the floor area ratio allowed them to build close to the max. That is where the equity unlock happens.

The smart move was keeping it to 2 stories instead of 3.

Going 3 stories can increase costs around 10% per foot:
More structural reinforcement
More concrete and scaffolding
2x6 framing instead of 2x4
Plumbing lines and venting need to be cast iron (3x the price)
Higher-skilled, more expensive labor

By staying at 2 stories, they reduced construction costs and risk while still leaving room in the back for parking.

The formula for success here:

Get into the deal at a lower basis as a single-family home purchase.

Keep the home and renovate instead of demolishing it.

Max out the density.

Make smart, cost-effective construction decisions.

That is how the owner created a big equity swing and long-term cash flow from a small infill lot.

If you want to find projects like this in San Diego, send me a DM. taken in University Heights, San Diego by @maxitoutadu

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7 months ago

A year in, and this project has thrown everything at us — from uncovering an old pool underground 🏊‍♂️ to navigating gas + electrical lines ⚡️, and even a massive right-of-way job

Big hurdles, bigger solutions 🙌 It takes a team that knows how to adapt and push through to the finish line.

If you’re taking on a complex project and need experienced partners, send us a DM — we’ve been there. 🏗️ taken in San Diego, California by @maxitoutadu

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a year ago

Investing in development deals is seen as riskier than the stock market or bonds. But an effective operator should be able to reduce risk on a project and there are several different types of benefits of owning large properties 🏙️

Development involves forced appreciation when your all-in construction costs are lower than the appraised values in the area 🏠

These properties can cashflow when you have a sufficient amount of equity in the deal and strong rents in the neighborhood 💴

And although real estate in coastal cities tends to appreciate over the long-term, there are several tax strategies that involve depreciating these assets to reduce your tax liability 📉 taken in SDSU by @maxitoutadu

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3

a year ago

We had SDG&E install this massive utility pole because we’re bringing in a 1000-amp transformer for our latest project near SDSU.

✅ Right-of-way permits approved
✅ Traffic control permits secured
✅ Dig Alert marking every line (gas, electric, water)

These kinds of projects take serious coordination — city engineers, utilities, contractors — all moving together. If you’re tackling something on this scale and need experienced help, send us a DM. 🏗️ taken in SDSU by @maxitoutadu

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7

a year ago

With these larger development projects, utilities can be a quite a bit more complicated and utilizing a dry utilities consultant or having a clear game plan early in the process can help reduce risk of issues later.

Sometimes the option that appears less expensive at the beginning of the project can lead to increase costs or timelines further down the road.

When interviewing GC’s, you can ask about their track record for similar projects and how they plan to approach yours ✅ taken in SDSU by @maxitoutadu

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5

a year ago

Title 24 requires new construction in California to have solar or be “solar ready” - which means panels have not been set up, but certain requirements are met for future installation of them.

This is great for tenants as it lowers their electricity bills and great for California as we become less reliant on dirtier forms of energy ☀️

The cost of solar depends on how much you’re installing and whether you’re negotiating strong pricing or letting a vendor overcharge you 😬 taken in San Diego, California by @maxitoutadu

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a year ago

🏗️ The bonus ADU program has opened the door for developers to create more market rate / affordable housing units and give investors access to large equity gains, cashflow, and new construction assets to depreciate.

Larger projects can have more headaches related to right of way work, utilities, and other challenges. But when you use a team with a track record building these multi unit deals, financial freedom is only a few decisions away 🚧 taken in SDSU by @maxitoutadu

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a year ago

Progress update at 4972 54th St! It’s a good day to move some dirt! 🦺

Utilities and trenching are underway at our newest 12-unit project, built to bring more housing to the College Area community.

Flooring has been installed, and we’re next we’ll be gearing up for appliance deliveries, turf landscaping, and private yard spaces. Excited to bring this community to life! #infilldevelopment #multifamily #SDSUhousing #MaxitOut taken in San Diego State University by @maxitoutadu

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4

a year ago

For years, College Area has been a hub for our clients to capitalize on the growing rental market that SDSU brings.

If you want to share in the success and are curious how to get into the ADU space here, DM me and we can give you a free analysis on how to accomplish this goal.

#sdsu #multifamilyrealestate #multifamilyinvesting #sandiegorentals #sandiego by @maxitoutadu

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11

2 years ago

Having the right team to help analyze and understand what is feasible as well as practical for your property is crucial when developing on it.

This client decided to go BIG and will be maximizing its profit potential once this is rented out to SDSU college students this upcoming semester.

Force Appreciation + Cash Flow = Freedom

#multifamilyrealestate #multifamilyinvesting #sandiegodevelopment #adu #cashflow by @maxitoutadu

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2 years ago

What do you think?

All in for $8m for a property that is worth $10m - Is that worth 2 years of managing construction and leasing?

For a 6 story project like this, I’m seeing construction come in at about $325 per square foot. Timelines can take longer and costs can be higher when you need to build with concrete and include elevators. taken in University of San Diego by @maxitoutadu

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2 years ago