Oceanside - Mother in Law Suite Drama - Advice? (San Diego: sales, real estate)

[cgrapids]

Hello all. Thanks in advance for your input. We recently purchased a retirement house in Oceanside. We prefer to keep it rented due to finances; we overspent a bit on the house and renting it instead of living in and selling our much cheaper house in the Mid West is more "comfortable" for us.

We have felt we could get the best of both worlds by having a mother in law suite above the garage. There is no space to do this in the lot. The only issue is, in order to build the unit, it will be pretty expensive (I'd estimate 100-150k or so). The worst part is that the city of oceanside has very very high permit rates for this structure. Accessory Dwelling unit (ADU) permits require:

3 Independently accessible parking spaces (the spaces in the drive do not count since they are not independent as they are in front of the garage, we need to enlarge the driveway to add a space).

Permits run to about 25k for the city of Oceanside. It's unreal. 4500 for schools, 4500 for parks, etc etc.

Some construction companies I talked to on the phone tell me that a 700 square foot unit with two bedrooms and a basic kitchen could cost us at least 250k!

The other option is to build the unit as a "addition". Doing so requires no additional paring space, and the permit fees etc are basically $500 instead of 25k. The catch: You can't add on a kitchen. As soon as you do so it's a "unit".

I know plenty of people probably just add an illegal kitchenette. What's the damage if u don't tell? Would it be a major issue once you go to sell?

Any advice people can offer would help. We've also considered just placing an RV in an RV space at the house.

[Electrician4you]

Insurance. If something happens you may not be covered if you do a full kitchen. The permits are different because when you build you have to submit plans. Then it would get inspected. Rough and finish. So your gas electrical etc would be seen. So all your kitchen stuff would need to be done after the permit is closed. Illegally. The new buyer can pull the permits see what you permitted and what's actually there. And they would see the unpermitted work and that could sink the sale and if it doesn't it may have a huge impact on the price as the buyer can demand money off since he's now buying a liability.

Using a RV as a rental spot? You may run into issues from the city or neighbors calling and complaining. Make sure it's ok to have a live in RV rental

Also you have different fire restrictions as it is on top of a garage entry and egress fall into play too from a dwelling to a addition.

I don't see the financial advantage of building a 150/250K addition just to rent it out. I would say you will recoup when you sell.

[someguy10]

Running such a large project remotely is almost always more time/stress/cost than you could ever initially expect.

Sounds like a classic case of the sunk cost fallacy. IMO you're considering three options that all have major downsides because you feel personal obligation. I suggest looking at the place as-is as a rental from a purely business standpoint (Google the 2% or 50/50 rule). If the cash flow or speculation on real estate appreciation meet your requirements, keep renting it out without mods and if they don't meet your requirements, sell it.

[RosieSD]

Welcome to California home ownership.

Do you plan to sell the house at some point in the future? If so, any illegal unpermitted addition or modification to the house will complicate the sales process. Google "home addition without permit" and carefully read what turns up.

Neighbors have a way of noticing that a home has been subdivided and rented out to tenants, especially if they start noticing extra cars parked on the street and people coming and going. It's not unheard of for neighbors to call the city to report that a neighbor has added an apartment so that's another reason to be cautious of unpermited work meant for a rental.

Also, any contractor who would agree to build or modify a home without proper permitting in place is not a contractor I would feel comfortable working with.

Finally, having added on to our house twice, I can say that I've learned that any initial "estimate" given by a contractor should only be taken as a starting point. Invariably, once building gets underway, there will be unexpected surprises and changes in plan that drive the cost up. With both of our additions, we "built in" an extra 5% to the estimate the contractors gave us just to cover those unexpected surprises. I have, however, had friends and acquaintances who ended up spending way over the estimates contractors gave them when they discovered things like termites/dry rot, a need to reroute plumbing for the addition, and cheap contractors "flaking out" of the job, necessitating hiring a new contractor at a more expensive price. So, be sure to vet your contractor(s) carefully and be plan for possible surprises once work gets underway.

[snpdragr]

Agree with someguy10. Don't feel that you have to do something just because that was your original plan. And unless you've worked with contractors on a big project before, I'd think twice about the hassle.

Personally, I would revisit/recompute the finances for all of your options (including doing nothing) to see what your investment (time/money) and return would be. Compare it to your opportunity cost of just investing the money in traditional financial assets (stocks/bonds or even an annuity) or other rental asset (in the midwest you could buy a whole house for the cost of your remodel).

You may also want to look using the MIL space as a short term rental (airbnb/vrbo/etc) if allowed by the city. I think a short term renter would be more tolerant of not having a full kitchen. Even if you are remote, you should be able to find someone local to handle cleaning etc.

I would *definitely not* add an unpermitted kitchen. I imagine this would open you up to considerable liability. If you are retired with a second home, you probably have substantial assets outside of protected accounts (in many states 401k accounts are protected from creditors). In retirement, you want to eliminate risks, that no matter how small in probability, that could sink your finances permanently.

[RosieSD]

Originally Posted by cgrapids

H= We've also considered just placing an RV in an RV space at the house.

Here's what the city of Oceanside Code says:

You may not live in any parked vehicle or trailer on your property, any vacant site or a street. Nor can you connect them to any electrical, gas or water system.


City of Oceanside, California - Code Enforcement Regulations


In a neighborhood of small lots, it's highly unlikely your neighbors won't notice (and report) that someone is living in an RV on the property for more than a few days.

Perhaps you should just consider selling the property if you're not able to afford it?

[RosieSD]

Originally Posted by snpdragr

A
You may also want to look using the MIL space as a short term rental (airbnb/vrbo/etc) if allowed by the city. I think a short term renter would be more tolerant of not having a full kitchen. Even if you are remote, you should be able to find someone local to handle cleaning etc.

That's a good suggestion, snpdragr.

[Liz_7]

Originally Posted by Electrician4you

Insurance. If something happens you may not be covered if you do a full kitchen. The permits are different because when you build you have to submit plans. Then it would get inspected. Rough and finish. So your gas electrical etc would be seen. So all your kitchen stuff would need to be done after the permit is closed. Illegally. The new buyer can pull the permits see what you permitted and what's actually there. And they would see the unpermitted work and that could sink the sale and if it doesn't it may have a huge impact on the price as the buyer can demand money off since he's now buying a liability.

So this explains the glut of subpar studio/MIL units in San Diego without full kitchens. Interesting.

[someguy10]

Originally Posted by Liz_7

So this explains the glut of subpar studio/MIL units in San Diego without full kitchens. Interesting.

Yes, plus kitchens (and bathrooms generally) are the most expensive parts of a house on a per square foot basis even without permit fees. Kitchens (and bathrooms) are also the biggest sources of hassles with tenants -- plumbing leaks, stove smoke and grease, lots of appliances that break, et cetera.

[RosieSD]

Another thing to consider: if you add a new extension or MIL suite, it may change your property tax assessment. https://www.boe.ca.gov/proptaxes/faq...struction.html