At the time Red Door’s principals finished their first project, they recognized the ability to help contribute to the construction of new housing in Los Angeles, while earning a strong return for investors. Just as Red Door recognized opportunity with the new ADU laws in 2019, once again Red Door has recognized opportunity for investors with the passage of two laws in California, SB 9 and AB 1033, both of which were passed in 2023.

SB 9 allows an individual to add a duplex to any single-family residence lot they own in the state of California, regardless of whether the individual lives on the lot. AB 1033 allows individuals to sell their ADUs as separate units if an HOA is created for the property, in essence turning those ADUs and the main residence into condominiums. 

The City of Los Angeles has recently adopted regulations that will allow for up to five units on a single-family residence lot through the combination of SB 9 and existing ADU laws. (See rendering on the next page). The addition of AB 1033 will then allow those units to be sold off individually as separate condominiums. Internal modelling by Red Door, based on our five years of experience developing ADUs in Los Angeles, indicates that an ADU condominium project should yield a return of approximately 20-25% over 15 months.