My neighbor told me he cleared the ADU permit in six weeks and I cannot figure out if I should believe him

Question

Six weeks. I have been budgeting mentally for six to nine months on my own lot in Sacramento, based on everything I have read and a conversation with a permit runner who works the county. My neighbor is in San Jose and says he submitted in October and had the permit in hand before Thanksgiving. I asked him if he used a pre-approved plan through the city's ADU plan library and he said no, custom drawings, a local architect he has used twice before. I do not know what to do with that number. If I build in eighteen months of carrying cost before a tenant is in place and it actually runs six months, I have priced myself out of a project that would otherwise pencil. If I plan for six months and it takes fourteen, I am underwater on the construction loan before I have earned a dollar. The permit runner told me San Jose has a dedicated ADU counter now which is apparently the whole explanation, and Sacramento does not have that yet. So maybe it is not transferable at all. Still, six weeks is sitting in my head and I cannot put it down.

chriswalton8 · Answer

San Jose stood up that dedicated counter in 2022 and it genuinely did collapse timelines. Six weeks on a custom set is plausible there, not a fluke. Sacramento is a different animal and the permit runner is right that it does not transfer.

For Sacramento I would not go below nine months in my underwriting, probably twelve to be honest, especially if your drawings are custom. What I want to know before committing a dollar: what is your construction loan rate and does it have an extension option, because that is where the real exposure sits if you blow past your projected certificate of occupancy date.

raj_mehta14 · Answer

The permit runner is probably right that it does not transfer. Sacramento was still running ADU applications through the general building queue as of early 2024, at least that is what I read in a few threads on the Norcal real estate investors group on Facebook. Someone posted their timeline there, submitted February, got approved the following November, custom plans, infill lot in Elk Grove which is county not city but still. Your six to nine months sounds closer to reality for where you are building.

What I would do with the carrying cost math is build two scenarios and see which one breaks the deal and which one just hurts. If fourteen months breaks it completely then the project probably has a margin problem that a faster permit would not fix anyway. Six weeks is a real number for San Jose right now but it is basically a different regulatory universe than Sacramento and treating it as a benchmark is going to mess up your underwriting.

My neighbor told me he cleared the ADU permit in six weeks and I cannot figure out if I should believe him

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