ADU New Construction Loan – Los Angeles, CA

The Opportunity

Middle-housing developers in Los Angeles had recently completed rehab on a single-family home in the Eagle Rock neighborhood. Given the size of the lot, they recognized the opportunity to increase the property value by adding accessory dwelling units (ADUs) to the property.

Given the favorable regulation environment for ADUs in Los Angeles, the developers designed plans to build three full ADUs and one junior ADU on the property. They looked for a lender that could use a commercial appraisal to underwrite the project based on the unique value of ADU projects in Los Angeles. They also needed a lender that could close this kind of complex loan efficiently.

The Solution

Using a commercial appraisal, Lima One was able to finance the construction of the four ADUs with a $2.133 million loan that included a $1.13 million construction budget. Lima One worked closely with the developers to navigate appraisal and insurance issues to ensure the loan got to the closing table.

Through the project, the developers will increase the value of their property by at least $1.75 million, while creating four desirable new housing units in the Eagle Rock neighborhood. It’s a win for the builders and the community, demonstrating how ADUs and other middle-housing solutions are powerful tools to create needed housing stock.