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Silver Contributor
newbiehere
Posts: 464
Registered: ‎05-29-2009
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In-law unit questions

Can in-law units be rented out ? Are there rules against that in the South Bay - Saratoga/San Jose/Cupertino etc?

 

Also what are the rules regarding adding an in-law unit to a property ?

 

I forsee needing a unit in the future (for granny of course!). But trying to understand if I can justify buying a house with an in-law unit now. The cost could perhaps be justified if rented out in the first few years when I dont need it myself. (I am not saying price is right for these properties. Just giving an example of homes in single family neighborhoods with in-law units).

 

http://www.redfin.com/CA/San-Jose/1015-Avondale-St-95129/home/790025

http://www.redfin.com/CA/Saratoga/13991-Saratoga-Ave-95070/home/839752

 

Alternately buy a property where an in-law unit can be added in the future.

 

I also see some properties listed with an extra workshop/art studio etc. Can those be rented out ? Can they be converted to an in-law unit (iwth kitchen/bathroom etc) ? Some listings call it a cottage etc. Does the terminology matter in what type of use is allowed ?

 

Thanks.

 

Regular Contributor
sonrisa
Posts: 128
Registered: ‎02-19-2009
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Re: In-law unit questions

[ Edited ]

It is difficult to give a broad brush answer. Whether an outdoor building can be converted into a rental unit and whether an existing in-law unit is legal to rent will be determined by local law and city approval of that particular unit in question. Don't rely on the assertions of either the agent or current owner as they may not be well informed. A current tenant doesn't even guarantee legality. Once you find contender, it will take some homework to determine whether or not you can rent. 

 

Good luck. 

Message Edited by sonrisa on 10-06-2009 11:56 AM
Silver Contributor
Smurf
Posts: 511
Registered: ‎03-27-2008
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Re: In-law unit questions

Yes, in law units can be rented out, as can almost anything you legally possess.

 

Your next question is a bit more complicated, because Rules and Laws are two different things. 

 

Laws: there are Federal, State, County, and City laws that you are obligated to observe when renting property to someone.  If you intend to comply with the laws, you really should consult an attorney or obtain a "How to be a landlord" book (e.g. Nolo Press) and get up to speed on what is expected.

 

Rules: these are not laws, but terms that you create in the rental agreement (a legal contract) that the tenant is obligated to obey during their tenancy.  For example, you can create a rule that prohibits smoking in or around the unit, even though technically doing so is not prohibited by law (except in Belmont).  Rules allow tenants to waive certain legal rights as part of the rental agreement, but in no case can a rule violate an existing law.

 

The question you need to ask here is "do I really want to be a landlord"?

 

Building a stand alone in law unit or converting part of your existing home to one is pretty straightforward and should be treated like any other major remodeling work.  Draft the designs, get the permits, do the build, pass the inspection, etc.

 

The question you need to ask here is more around cost / benefit.  Model out your breakeven point to determine if building is worth it.  Net costs divided by total months you intend to rent before granny moves in will give you the minimum monthly rent that will cover your expenses (break even).  The tough part is calculating your net costs, because you have to factor in more than just the build costs; you have to consider things like liability insurance, tax effect of the rental income, etc.  An accountant or financial advisor who has experience with property related accounting/budgeting can help you get the numbers right. 

 

Gold Super Contributor
norcalnative
Posts: 3,277
Registered: ‎05-04-2009
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Re: In-law unit questions

If the property has enough access to fit a wide trailer - there are companies that build prefab small homes they simply trailer it to your house and drop it on the foundation - you have a plumber hook it up - electrician hook it up and your set. I've seen some that are even furnished and decorated all you need is a parking spot. I've seen them for as cheap as 40K. Very tempting as long as the codes allow for it and you have space to do it.
Regular Contributor
IrisInom
Posts: 52
Registered: ‎02-02-2009
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Re: In-law unit questions

Talk to your local government and see what the regulations are, they vary a lot.

 

Around here (Santa Cruz County) granny units are permitted in many areas, but they are subject to a lot of regulation. The City of Santa Cruz has published a 77 page booklet on granny units. http://www.ci.santa-cruz.ca.us/pl/hcd/ADU/PDF/ADU_Manual.pdf. That's a lot of guidance.

 

In some areas there it is prohibited to rent out both the granny unit and the main house, and I think I remember that some town had income limitations on who you can rent to.

 

So talk with your local government and ask a lot of questions. And remember that regulations and policy can change, so conditions may be different when granny gets ready for her unit. 

 

Good luck!

Regular Contributor
sonrisa
Posts: 128
Registered: ‎02-19-2009
0

Re: In-law unit questions

[ Edited ]

Smurf wrote:

Yes, in law units can be rented out, as can almost anything you legally possess. 

 


I just want to add a note of caution to smurf's comment.  Up where I am looking (Marin County) I've seen many "inlaw units" that cannot legally be rented out for residence.  The units in question fail to comply with habitability standards. Sometimes the problem cannot be remedied without significant expense (include things like size and placement of windows in a partially underground unit).  The most heartbreaking examples are currently occupied by tenants.
Just keep in mind that presence of an inlaw unit, or tenant, does not automatically mean it is legal.  And, as noted above, even legal units can be subject to restrictions and regulations. 

 

Message Edited by sonrisa on 10-08-2009 01:51 AM
Silver Contributor
newbiehere
Posts: 464
Registered: ‎05-29-2009
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Re: In-law unit questions

Thanks for all the well-thought out responses.

 

I went searching for some guidelines for Santa Clara county, but could only find one for San Jose.

http://www.sanjoseca.gov/planning/zoning/secondunit_files/secondary_units_brochure.pdf

 

 

 

Silver Contributor
Smurf
Posts: 511
Registered: ‎03-27-2008
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Re: In-law unit questions

sonrisa wrote:

 

I just want to add a note of caution to smurf's comment.  Up where I am looking (Marin County) I've seen many "inlaw units" that cannot legally be rented out for residence.


I assumed that went without saying, but perhaps should have better qualifed my statement.  "Yes, in compliance with applicable laws, in law units can be rented out, as can almost anything you legally posses". 

 

The reality is that most of the rented in law units do not comply with codes and standards, nor do the landlords follow the appropriate laws when acting as rentees.  Slap up some walls and cheap finish in the basement storage area to create a studio, then put in some cheap appliances and rent the results to a SF State, USF, or UCSF student for $600 monthly rent, cash only of course (so you don't have to pay taxes).  Whoops, I just described 60% of the Sunset District...

Regular Visitor
HappyBlue
Posts: 6
Registered: ‎07-25-2009
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Re: In-law unit questions

The rules about adding an in-law unit should be found on your City's website under their Planning / Permit division.  They can be pretty complex, so you ought to find identify them prior since in our area, there are a bunch of restrictions, such as minimum lot size, setbacks, where you place the front door, whether you're required to put in additional parking.  Plus some more esoteric things, such as Sunnyvale requires an owner-occupant for the next 20 years after the permit is issued.

 

Here's Sunnyvale's link:

http://sunnyvale.ca.gov/Departments/Community+Development/Planning+Division/Residential+Planning/Pla...

 

Not sure about the rules of renting out the unit itself.

Regular Contributor
sonrisa
Posts: 128
Registered: ‎02-19-2009
0

Re: In-law unit questions

[ Edited ]
smurf - you just described my husband's apartment while he was at UCSF. It came with many added "benefits," including pigeons living and pooping in the stairwell from bedroom to kitchen and bath.
Message Edited by sonrisa on 10-11-2009 10:23 PM
Message Edited by sonrisa on 10-12-2009 12:39 AM