AlphaX CEO Stephanie Yi Joins Industry Leaders to Discuss ADU Market Trends at IMN Forum

AlphaX CEO Stephanie Yi Joins Industry Leaders to Discuss ADU Market Trends at IMN Forum

On September 10, 2024, the IMN ADU Forum was successfully held in Dana Point, California. Stephanie Yi, CEO of AlphaX, was invited to join the Advisory Board of the Forum and, along with various industry experts, delivered a speech in person.

In this article, we will review the forum and share Stephanie's insights and practical experience in the ADU market.


About Stephanie Yi:

As a successful real estate entrepreneur, Stephanie specializes in researching and analyzing investment opportunities in emerging markets. With a Ph.D. in Biology, she founded her own biotechnology company and successfully exited through its acquisition by a public company. She later gained extensive experience in fund management as a fund manager. With her unique and inspiring entrepreneurial background, Stephanie is able to identify opportunities and quickly assess and mitigate risks in the investment market by leveraging her vast experience in fund and company management, along with her knowledge of real estate.

In 2019, Stephanie officially entered the real estate industry, and within just a few years, she led AlphaX to achieve notable success. Her accomplishments were recognized by Fiona Ma, a prominent political leader in California's Chinese community, who personally endorsed her.


About the event

The forum's distinguished advisory board brings together prominent entrepreneurs and political leaders in the ADU space to discuss the current and future state of the industry!


How many lots are plated with ADUs as a part of the home plan?

AlphaX is a vertically integrated SFR-focused investment company. We manage our portfolio through internal design/development/building partners. Right now, we have two for sale and rental business lines, investment in scattered lots, and 100 units or fewer communities.

Since over 95% of the land is an SFR zone in California, we would like to think of ourselves as impact investors as we are trying to contribute more attainable housing units to the California housing crisis. Therefore,

For our for sale portfolio, our existing $200M For Sale pipeline, we focus on infill projects in the Bay Area. ADU has been incorporated into our checklist of design strategies in 80% of our projects, whether it is a single lot or a small planned community project. The return is good as well. Our price per square is $1,000-$1,500. The ADU can add in sqt to increase the size of the house which is limited by the lot size.

For our Build-to-Rent program, we use ADU as an advantage. ADUs offer a unique opportunity to increase rental income, maximize land use, and attract a broader range of tenants—all while minimizing costs compared to full-scale multifamily developments. By incorporating ADUs, developers can improve both the short-term cash flow and the long-term value of their BTR assets. We also combine SB9/ADU rentals.

We just started SFR-BTR in the inland empire, and we put ADU and maximized the ADU to increase the rent and balance the land and horizontal costs. In particular, we are trying to put in an alley or wider driveway too for better access.


How many buyers are going with ADUs?

Depends on location and which type of ADU. Garage conversion is not favorable in high-end areas. The demand for properties with ADU skyrocketed in the last decade, driven by the region's housing shortage, high property values, and increasing interest in multigenerational living, home office, and rental income potential. While hard numbers may vary, the rising interest in properties with ADUs in the Bay Area is evident. ADUs add flexibility, generate rental income, and address housing needs, making them a highly desirable feature for many buyers in the competitive Bay Area market. In San Jose, the pre-approved ADU plans are especially popular. We get a lot of inquiries for detached ADU 1200 SF.


Are you offering attached, separate, or both?

At AlphaX, we offer both attached and separate ADUs, depending on projects and if the lot allows. Detached ADU is more popular as it offers more privacy for independent living.


Are homebuyers using ADUs for additional income or family members?

Homebuyers are increasingly using ADUs for both additional income and housing for family members. The specific use often depends on the homeowner's needs and circumstances:

Additional Income:

  • Rent out ADUs as long-term rentals or short-term vacation rentals.
  • Generate extra income to help with mortgage, property taxes, or other expenses.

Housing for Family Members:

  • Home buyers need a separate home office/family member/Guest houses
  • Provide independent living space for aging parents ("granny flats") or adult children.
  • Maintain close family connections while offering privacy and separate living quarters.


What are the design choices you offer? What are the popular options that homeowners are choosing?

  • We offer 500-1200sqt.
  • 1000-1200 sf with separate entrance/parking
  • Many municipalities cap ADUs at around 1,200 square feet, but the sweet spot for most homeowners is between 500–800 sq ft, which balances functionality, cost, and regulatory compliance.
  • Also, the 749 SF floor plan is very popular because it is under the 750 SF threshold, so no development impact fee is required by the city. (SB 13)


Are there any government incentives that you are using?

We use government incentives to:

  • Reduced Development Impact Fees

As part of California Senate Bill 13 (SB-13), ADUs under 750 sq. ft. are exempt from development impact fees, and for larger units, fees must be proportional to the size of the ADU relative to the primary dwelling.

  • Property Tax Benefits

California's Proposition 13 allows ADUs to be assessed separately, meaning the property taxes on the main home may not increase significantly due to the construction of an ADU.

  • Zoning Reforms and Streamlined Approvals

Recent state laws (like SB-9 and AB-68) have reduced barriers to building ADUs by prohibiting local governments from applying overly restrictive zoning and development standards.

Homeowners are now allowed to build ADUs on single-family lots more easily, often without needing a discretionary permit.

There are also other incentives available that we do not use, such as the State Grants for ADUs like the CalHFA ADU Grant Program which provides up to $40,000 in grant funding to help cover pre-development costs such as permitting, architectural designs, site surveys, and impact fees. Homeowners can apply through participating lenders.


How much are your ADUs adding to the purchase price? Bottom line ROI?

Increase in Property Value:

  • ADUs can add significant value to a property, often increasing the overall property value by 10-20% depending on the location and quality of the ADU.
  • In high-demand areas, the value increase could be even higher, especially if there’s a strong market for rental income or multi-generational living.

Increased Rental Income

  • Higher ROI: ADUs typically require a lower investment compared to building an entirely new rental unit from scratch, but they still offer rental income, leading to a higher return on investment.



ABOUT US

AlphaX RE Capital is an Asian-owned, women-founded real estate development and investment group deeply rooted in Silicon Valley. We currently oversee 370+ active projects across Northern and Southern California, including master developments, planned communities, and scattered single-family residences and ADUs.

For inquiries and investment opportunities, you may schedule a one-on-one meeting with us or join our Investor's Club for free.


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