Owning an apartment building in Los Angeles can often feel like navigating a complex maze of regulations and rising operational costs. However, there’s great news for multifamily property owners: SB 1211, recently signed into law by Governor Newsom, presents a unique opportunity for apartment building owners in Los Angeles to increase rental income through expanded Accessory Dwelling Unit (ADU) allowances (CA YIMBY).
While ADUs may not be suitable for every property, they can transform underutilized spaces, such as parking lots or storage areas, into lucrative revenue streams—provided your property is located in the right zoning area. In some cases, this new legislation could mean up to $172,800 in additional annual rental income for your multifamily property in Los Angeles.
Let’s explore how ADUs can enhance the income potential of your Los Angeles apartment building with a real-world example. Consider a 40-unit apartment building in Mid-City, Los Angeles, featuring a parking lot designed for 50 cars. Like many properties in the area, much of this space is underutilized. By converting 4 unused parking spots and 4 storage spaces, you could create 8 new ADUs.
Adding ADUs to your Los Angeles multifamily property can significantly increase your income potential without adding major operational complexities. Given LA's chronic housing shortage, ADU rentals are in high demand, especially in neighborhoods like Mid-City, Koreatown, and Hollywood.
While SB 1211 opens up a wealth of opportunity for apartment building owners in Los Angeles, there are some considerations:
SB 1211 relaxes some zoning rules, especially around replacing parking spaces, but it’s important to confirm your property’s eligibility based on the Los Angeles Zoning Code.
The construction costs for ADUs can be substantial, but the long-term benefits, including rental income and property value appreciation, far outweigh the initial investment.
Partnering with the right contractor and securing financing are key steps to ensuring your ADU project is a success. Contractors specializing in ADU conversions can help streamline the process.
The real estate market in Los Angeles is highly competitive, and construction costs continue to rise. By acting now, you can lock in current prices for materials and labor, maximizing your return on investment. SB 1211 offers a rare opportunity to use Los Angeles’s housing regulations to your advantage.
If you own a multifamily property in Los Angeles with unused parking or storage areas, now is the time to capitalize on this valuable space. Here’s how to get started:
In a city where complex regulations can often feel like roadblocks, SB 1211 offers a unique opportunity to turn the tide in your favor. With the right strategy, you can enhance your rental income, increase your property’s value, and future-proof your multifamily investment in Los Angeles.
Wondering if ADUs are the right fit for your Los Angeles apartment building? Curious about how this aligns with your long-term investment goals? As an experienced commercial real estate broker specializing in Los Angeles apartment buildings, I can help you navigate the process and make informed decisions. Reach out today to explore how SB 1211 can transform your property's potential!
Taylor Avakian is a multifamily investment expert and the host of No Vacancy, a podcast dedicated to exploring the latest trends, strategies, and insights in the real estate market. As the founder of The Group CRE, Taylor specializes in helping landlords and investors navigate the complexities of multifamily ownership in Los Angeles.