Introduction
ADUs dominate headlines, but they are not always the best development choice. In San Diego, the distinction between an Accessory Dwelling Unit (ADU) and a Dwelling Unit (DU) has real financial, zoning, and long-term implications.
ADUs: Speed and Fee Advantages
ADUs under 750 square feet are typically:
- Exempt from many development impact fees
- Faster to permit
- Easier to underwrite
These advantages make ADUs attractive for:
- Long-term holds
- Rental income optimization
- Refinance strategies
DUs: Higher Cost, Different Utility
DUs often:
- Trigger full impact fees
- Require more complex approvals
- Allow different uses (including short-term rental eligibility)
We personally paid $14,458 in impact fees for a 300-square-foot DU conversion — painful, but strategic for our property.
Choosing the Right Path
The decision should be driven by:
- Zoning
- Lot size
- Parking availability
- Intended use
- Exit strategy
The cheapest option is rarely the best one.
Final Takeaway
ADUs are efficient. DUs are flexible. The right answer depends on how long you plan to hold and how you plan to exit.
The information in this blog is for general informational purposes only and should not be your sole basis for financial or investment decisions. While ACI Apartments uses reliable sources for data and analysis, you should verify all information independently. This blog is not a comprehensive report on all changes to local, state, or federal laws affecting property owners and managers. Laws may have changed or been misinterpreted since publication. Always consult legal counsel or a licensed CPA before making decisions. ACI Apartments is not liable for actions taken based on this content. Information was gathered from CoStar and SDMLS.