Buying a Duplex to Build 7 Units

The Property

In early 2023, I bought a duplex at 3312 Luna Avenue in San Diego for $1,050,000. It had two units. Each had two bedrooms and one bathroom. Rent was about $1,700 per side. Not a great deal on paper.

But the lot was special. It measured 60 feet by 101 feet. The zoning allowed something called the ADU Bonus Program. ADU stands for Accessory Dwelling Unit. Think of them as small, separate homes built on the same property.

This program lets you build up to 5 extra units on a duplex lot. There's one catch. You have to rent one unit at a lower price for people who need affordable housing.

The Math

What We Start With	What We End With
2 units, ~$3,400/mo income	7 units, ~$19,500/mo income
$1.05M purchase price	$3.36M appraised value
Regular duplex	Duplex + 5 brand new 2-bedroom units

Building all 5 new units would cost about $1.37 million. After construction, the total money spent (land + fees + building) would be about $2.6 million. The property would be worth $3.36 million. That's a big jump in value.

Why ADUs Work in San Diego

San Diego makes it easier to build ADUs than most cities. Here's why:

State laws (AB 2221 and AB 976) made the permit process simpler
The ADU Bonus Program lets you build more units than normal zoning allows
No extra fees for units under 750 square feet
The city can't say no for personal reasons. If your plans meet the rules, they have to approve them.

What I Didn't Know Yet

When I signed the papers to buy this property, I had no idea what was coming:

My first designer would waste a full year and produce nothing useful
The power company would fight me for 11 months
My first construction lender would fail to get the money -- twice
I'd file a complaint against the power company with the state of California
A $0 lien from the Housing Commission would nearly kill my loan
I'd end up running the whole project with an AI tool

But that's the story. And it starts with a phone call to a drafter named Francisco.