Can I Build a Home in Phases in San Diego?

00:00Sean Canningyou basically are reducing your construction costs up front and then spreading out the remainder, over the next five to 10 years, in theory, you can move into a kitchen that's not completely finished, that would save you quite a lot of upfront money you'd basically be saving $5,000, and then you'd pay that $5,000 12 months after you purchase the systems if you have lots of money and you want an upscale home a nice neighborhood, this may not be the strategy for you if you have the patience, management skills or the construction skills, and you really need to get into a home in San Diego, is your avenue to do that

00:33BaileyOftentimes, the reason why people can't afford to build their dream home is not because of the cost of design or purchasing the lot, it's because the construction costs hit you all at once. So today, we're gonna be talking about how to spread that cost over months instead of weeks so that you can actually move into your dream home on time.

So Sean, what exactly is incremental housing and how does it differ from just building a house and not finishing it?

01:07Sean CanningOkay. Good question, Bailey. So first off, this is not an original concept. It's just a concept that I've been slowly s- applying to projects in San Diego, where obviously we have a housing crisis. So incremental housing could be looked at as like a planned or a designed, phased construction of a home or an ADU. the idea is that you can complete a certain amount of the project, move in, then later on over the next few months or the next few years even, complete the rest of the project. And the benefit of this, the main benefit of this, is you can reduce your upfront construction costs and spread out the remainder of the construction costs over the time you plan to move into the,move into the home or live in the home. So you could apply this at a small scale, move into the home, finish the final touches over the next year. but you could also spread this out over a larger timeline that would more fit like the lifestyle of the person building the home. So you finish the majority of the home, and then later on,a couple of years later, you start a family, and then you finish the rest of the home so that you have a larger home for your family. So that's the basis of the concept.

02:15BaileyGot it. So walk us through exactly what it takes to pass the final inspection and get the certificate of occupancy, and basically what needs to be done and what can legally wait. Like, what's the minimum viable amount of work you need to get done to actually be able to move in?

02:31Sean CanningOkay. I really like this line of thinking because I think there's two major milestones that have to occur if you're planning a project like this. So the first is what you just brought up, the regulatory, process. So you can't move into the home before final inspection in most scenarios. So you gotta have at least enough home to get a final inspection and a certificate of occupancy so you could start this process. another one also, which, is basically like weatherproofing the home. So you don't wanna move into a home before there's windows. You don't wanna move into a home before there's a roof. So let's just take a quick step back and define two major components of this project-- of this type of project.

So the first will be the shell, and this is also-- Both of these are r- important for getting final inspection as well. the shell would be looked at as, the weather resistive barrier, your exterior walls, your, your foundation as well as part of the shell, and your roof. So you need to make sure that the home is weatherproof before you move into it. and then any improvement that you make is within that shell. So that's the first concept you need to understand. the second concept is a little bit more, maybe theoretical, I guess we can call it, and that's what is referred to as the core. So the core is going to be a kitchen facility, at least one bathroom, and then,a general space that's weatherproofed.

So that's the space that you're gonna be living in while you go through the rest of the project and build out the rest of the project. So to answer your question specifically, to get a fi-- to pass a final inspection, obviously you have to have a permit, and then the inspector's gonna be coming out to, go through the series of milestone inspections, you have to have at least one three-quarter bathroom, so that's a sink, a toilet, and a shower. You gotta have some sort of kitchen facility, so that's gonna be a sink, cooktop, and ev- and a refrigerator. But even an oven is not a requirement of a kitchen. and then, you gotta have the whole thing weatherproofed you've passed your foundation inspection at this point, your framing inspection, your insulation in-inspection, and, all of your inspections. So you h-- you really gotta do a lot of planning upfront, the goal is for you to complete the shell and complete the core, and that'll get you final inspection, and then you can move into the home and begin making your,begin planning the rest of these smaller improvements.

04:43BaileyGot it. I think that's a pretty reasonable starting point anyway. You probably wouldn't wanna live in a home that didn't have that. I believe you've prepared now a screen share or some resources we'll be looking at on your screen to kinda just walk this, walk through what this actually looks like in different phases from both small scale all the way up to larger scale.

So why don't you pull that up. Also, I feel like worth noting, you know, depending on when people are listening or watching this, they might wanna just consult the latest regulations in San Diego for what's applicable

05:12Sean CanningYeah, certainly. Okay, so let's start with two example projects. Both of these are in Chile, and I do wanna credit the architects who have designed and planned these projects because, they are looked at as like the most critical examples of these types of incremental housing projects. So the first architect is George Gattoni, and the second architect is Alejandro Aravena. here's the first example by Gattoni, I think when you look at this, you can really understand the concepts very clearly. a space on the left side of these homes that serves as the core, and then you can clearly see the shell is built around the core, and the shell actually extends with a roof, an exterior wall, and a space here which could be a balcony, and a space here which could be a carport. over time, a homeowner lives in these spaces, they'll generate, more money, and they'll be able to put some money in the bank, and then eventually they'll be able to launch into projects that specifically suit the needs of the homeowner. So in this scenario here, it looks like they're building out an addition on the ground floor, so no longer need that carport.

Now becomes an addition for a growing family. it looks like they also have something planned here on the second floor. maybe they decided that they need an extra two bedrooms rather than the balcony. Here's the second project. So this is the one done by Aravena, and you can see it's essentially the same concept.

The only difference here is really they didn't connect the roof, which means that it's gonna be a little bit more difficult for them to build out that second story here. But it also means that their initial cost was lower when they completed the initial phase of the project. And these are planned as like low-income housing because at the time, Chile was experiencing some natural disasters, and they had to add a bunch of housing really quickly. here's an example of one of them being built out, and look, you can see on the image on the left, it's already been built out. The image on the right is in the process of building out. that's a good point for an example

Now let's get more specifically into this in San Diego. This is a project that I've designed for my own lot, and we've been considering using the incremental housing concept just to keep construction costs lower. here we have-- The purple house here is the existing house. This is going to be an ADU we're planning, and this is a garage which then will later be converted into an ADU. So if I look at the floor plans here, I'll point out a couple things, and I just kinda wanna rapid fire go through a couple of the, things that we're scheduling, the construction components that we're scheduling for a later phase. So I'll start very simply, and this is one I usually recommend to all my clients. The landscaping of a project when you complete these s- structures, lot is gonna look pretty bare because there's a lot of work that goes on through construction, and a lot of times, it looks like a big mud pile. But you don't have to have landscaping, at least most of the landscaping, installed at final inspection, so that can be something that you easily phase out and complete over the next year or two years on, a series of weekend projects. Not everybody's up for the weekend projects and those, those types of clients, this may not be the best strategy for them. but even if you don't wanna do the work yourself, it is work that is very easy to be independently subcontracted. So you don't need to have your general contractor installing your landscaping. You have your general contractor install, build everything that's on the plans, then you pass final inspection, you move into the home, and then you and your partner or y- you subcontract a landscaper, and then you can do all the landscaping around the unit.

So that would be a great example. Another simple example is adding solar panels. So as long as the solar panels are not required as part of the Title twenty-four report, which in California a lot of times solar panels are required. But especially when we're building ADUs, we're trying to make it so that the ADUs are not a requirement of final inspection. And that allows us to save up some money, install the solar panels at a later date because we're already installing a solar-ready roof, and the electric panel's already, prepared for solar panels. So three years after you finish inspection, you can contract with the solar company, they'll get a special solar permit, and they can install the solar panels.

So that's another common one that we're already implementing here. Okay, now I'm gonna get into some of the more specific items here, some of the things that we're considering for this project specifically, and I'll start with the low-hanging fruit again. So let's take a look at the ground floor here So this is the entry for the larger ADU, and we have a little bit of a drop zone plan.

So we have a closet planned here and a closet planned here. And then also in the kitchen, there's a pantry here. So there's some closet-type spaces. And then if you go upstairs, we have a big closet here for bedroom one, and then there's a smaller closet here for bedroom two. And then in the utility room, there's a closet for extra storage and linens and things like that. So of these closets will not be installed at final inspection, and that's just to keep the cost as low as possible. So in theory, we would move into these spaces here. There's no sink in bedroom one, by the way. That's a misprint. we would move into these spaces here with our clothes in boxes. We'd live out of those boxes, and then slowly over the next g- the next couple weekends, we would go to IKEA, and we would build out their closet system, which is their p- IKEA pack system. IKEA also offers, no interest for 12 months, so you could actually buy all this stuff on an IKEA credit card, pay no interest for 12 months while you build these things out slowly. So we would probably start with the master bedroom first because it's just Margaret and I. So we'd build that out, move our clothes into that closet, and then maybe the next thing we would do is build out, this utility room, or maybe we build out this drop zone here so that when our guests come, it looks finished. So that's a pretty easy one. The capability you'd need to accomplish something like this is probably just the ability to build an IKEA pack system, which is like mid-tier on the IKEA assembly, s-skill level. And, we have enough closets planned here where we'd probably end up spending $5,000 on these closet systems. if you were to employ this technique, you'd basically be saving $5,000, and then you'd pay that $5,000 w- 12 months after you purchase the systems. So that's the benefit there. Okay, a couple other ideas here. So we have our sink and our kitchen planned right here, and then this is a twenty-four inch wide cabinet. In the future, that will become a dishwasher. this is a good opportunity to point out, the conflict that you have in City of San Diego with permitting. Technically, a dishwasher would require a permit. In reality, nobody would get a permit for this dishwasher. So you do have to be careful.

There's-- Some of these things could trigger permits, and I'll try to point out the ones that would. The closets would not trigger permits. So the closets sy- strategy is very simple. The dishwasher requires that added risk that you technically need the permit. You could probably do it with a no-plan permit if you really wanted to get that. Okay. Now, another thing is over here where we have our parking plans, I'll just switch to the site plan so it shows. So we have two parking spaces planned here, and we have this whole area here planned with three-quarter gravel, which is the cheapest ground cover you can get to park a car. Now, within the city of San Diego, you cannot do this on a driveway that's off the front.

You have to have a paved driveway. But off the alley where we're planning this, you can just use three-quarter gravel, which is what I have down there now. And that's a more appropriate ground cover for construction as well. So it makes more sense to leave that three-quarter gravel here during the construction phase. After you finish the project, you can still park on it. And then a couple of years later, we could pave this. Three-quarter gravel is always gonna have an issue with weeds, so it's a maintenance issue. so at some point we just pave that. No big deal. In between the units here, we have planned a deck.

So that's another thing that we can build out over a couple weekends. final inspection, you're gonna have to have a step into this entry, and you're gonna have to have another step into this entry here, but that's the only requirement. So you can do this with just some pressure treated wood or, it's a temporary step. You don't even need to use pressure treated wood. But that'll be enough to pass inspection. Then we build the deck at a later, later point. Okay, now we'll get into some of the more complicated ones that probably would require some permitting. And I don't have great examples here 'cause I'm not planning these right now, but I'll use this plan just to serve as an example. so take a look at the first floor and the second floor plans together. So second floor right down here and the first floor here. Second floor fits directly over the top of the second floor. So at final inspection, plan to build this three-quarter bathroom here. If I was to take out a second permit and I wanted to do a second bathroom, I could very easily extend that plumbing right above. And you could also do the inverse of this. If you planned a bathroom on the second floor, it would be eas-- even easier to, plumb in a first floor bathroom later on. So on a larger scale project, this would be a really great strategy. At final inspection, you have to have at least that one bathroom, then you would pull a permit and do an interior remodel for a second bathroom.

You're not affecting the shell. That's the key component here because you don't have to do any work on the exterior. And you'd, you would've already planned all of your windows. So that's why it's a little bit more of a planning... You have to do a little more planning here because if there's gonna be a second bathroom coming in here, we need to make sure all our windows are conducive to that.

So I probably wouldn't be able to get away with this window here, this window here would be directly align-aligned here and that would-- that could work. Okay, so the next two are definitely more complicated, and we can consider these like the level two of incremental housing. So the second one would be Planning this as an ADU that I would live and planning this as a future ADU that I would rent. But the ultimate goal, five or ten years from now, once we, recoup some of the money from the construction, especially by renting this, both of these would be used like a single-family home. So I'll give you a s- very specific example of this. So while we move into here, we would use bedroom two as an office. But I would really like a guest bedroom at some point. So when this ADU gets converted-- when this garage gets converted into an ADU and it's no longer for rent, that, that whole ADU becomes the guest quarters. So initially, it's two rental units, one of which I'm living in, one of which is being rented. But the future plan is for them to be used together. could also do the exact opposite of this, where you plan to live in these initially, but later on I'd move to another property, and now I have two rental units here, plus the existing home where I'm currently living is the third rental unit. So that's a good solution. And then the last one is more closer akin to what I showed you initially here, that is where you build everything with pre-planned additions. So this is the pre-planned addition here. And you could also do this as, if you have a bigger lot, the existing home starts here, and then later on you extend into a bedroom and then another bedroom because you're gonna have a growing family. those are some good examples of how you could, practically apply these strategies in San Diego

15:46BaileyVery interesting. I like the approach a lot. We'll touch on the permitting in a second, 'cause you talked about that in all the upfront planning. I will say now, though, if anyone is in- interested in the permitting aspect of this, then I will link a bunch of relevant videos that we've done in the past on that, 'cause we've certainly done several deep dives on the permitting aspect of these projects.

But in terms of cost, though, how much can a... How much can someone save on the upfront costs and versus on this approach versus the more traditional approach of building it all up to 100% from the start?

16:18Sean CanningWell, that's a good question, and it depends on which of these strategies you implement. So where you're planning your addition, you'd save all of the cost of the addition, so that'd be significant cost. but if you're just going to do the closets, you could basically take a look at your construction estimate, figure out what the casework cost is, and eliminate that entire casework, line item. So that could be something like 5 to 10% of construction cost. it depends on how far you're willing to go with this strategy. in theory, you can move into a kitchen that's not completely finished, that would save you quite a lot of upfront money, and then you build out that kitchen over time. But you have to balance this concept of incremental housing how much you're willing to, put up with. So when Margaret and I built out our first home, we moved in before we painted the walls. so that saved us a little bit of cost, but then when we went to paint the walls, we had all of the furniture in the house, and that made it more difficult to paint the walls. You gotta take a balanced approach here and see how much you're willing to deal with, basically.

17:18BaileyThat makes sense. Yeah, it's gonna, you know, depend on everyone's unique situation. Now, in terms of the planning you talked about, so you mentioned that this requires a lot more upfront planning to begin with from the start of the project. So in the design phase as the architect, what does that exactly look like?

17:35Sean CanningOkay, the best way for me to explain this is to use the IKEA pack system, which is the closet system. you're gonna have a prefab closet system that you want to fit into a space. And the closet system, the reason we love IKEA's prefab systems is they come in very specific sizes. So they're twenty-four inches deep or fifteen inches deep, and then they come in different, standard widths.

I think it's... I c- think it could range from, six inches wide to twelve inches to eighteen, twenty-four, thirty, thirty-six. So usually about six inch intervals with some variation. So you're gonna wanna plan all of the areas where these things are gonna go upfront, so that when you buy those systems, they fit perfectly.

So usually, you liv- leave yourself about one or two inch room for error on either side. the same goes with the kitchen, cabinets. You don't wanna just not plan out the kitchen, and then when you go to buy the kitchen, it doesn't fit. So even though you're not planning on installing these at final inspection, even though they're not gonna be on the permitted set of drawings, there needs to be a design dr- drawing that captures all these future plans. And the, that, future planning or that, additional planning is even more important when you're planning something that comes with, an addition, for example. if you're gonna plan to build a small core home, which later on has a two-bedroom addition, this would be a great strategy for somebody who wants to, get into a house in San Diego but knows they're gonna need a larger home in the future.

So a growing family or somebody planning to move some in-laws in or something like that. That takes an extreme amount of planning because you have to have a master plan of the site, where the addition is gonna go, and how you're gonna get into that addition from that core home that you initially built. So the best way to do this is when you work with your architect, you plan the entire thing as if it's one project. You're gonna build the whole thing at once. then when you move into engineering and construction drawings, you strip out the thing that's not actually gonna be on the permit set. And we've done this on several projects where there's a phase two scheduled out. But like I said, it just requires an additional amount of planning. You may only be trying to build a four hundred square foot core home, but you're actually doing the design like it's an eight hundred square foot home with all of your interiors planned out.

19:47BaileyI think one of the more interesting things here is how... what possibilities does the ADU, or even in this case maybe the JADU, unlock when people are thinking about this type of a project?

19:58Sean Canning, That, that makes, introduces an entire new dynamic because in theory, you don't have to plan the, ADU so it has a interior connection. let's say you live in a home right now, and in the future you know you need an extra two bedrooms, an addition to the home doesn't make sense. could add two bedrooms, a bathroom, and a small kitchenette, which is basically a wet bar, to an ADU in the backyard, and then you h- you just have to leave the interior of your home to get into that ADU. So it certainly opens up a lot more possibilities on awkwardly designed lots where you can't get this, the addition to be planned, with an interior, hallway connection. but also if you can build two ADUs, and on most projects where there's existing multi-family structure, you can do that. And on projects where there's an existing single family structure, there's different ways you can get two ADUs with minor workarounds. So you could plan... you get 1,200 square feet for your maximum ADU size. If you use two ADUs, that's 2,400 square feet, and if that's all designed at once, that would be a huge home, and you could live there using both ADUs a single family home, or you could move off the property in the future and then you have two 1,200 square foot rentals. So once you introduce the element of ADUs, there's definitely...

It opens up a lot more opportunity. Let's just put it that way.

21:12BaileyYeah, definitely. And then last question here as we start to round out the conversation, who exactly would you say this type of project is for?

21:21Sean CanningOkay, so that is a great way to end this conversation because this definitely not a strategy for everybody. if you have lots of money and you want an upscale home a nice neighborhood, this may not be the strategy for you. It's probably better to just invest all that money at the front end of the project and build out your dream home exactly the way you want it. This way you can move in there, especially if you have young kids, you can move in there and everything is move-in ready. Like that... If you have the means to do that, that's the way to go. this specific incremental housing Strategy is gonna work best w- for the people in San Diego who are struggling to get into that home, because you basically are reducing your construction costs up front and then spreading out the remainder, over the next five to 10 years, depending on what, what level of this you use. I would say more specifically, it's gonna work best for somebody who can do these projects themselves. So if you can build a deck yourself, out that deck two years after you move into the home is-- just makes a lot of sense, especially if you can invite some friends over and you can kinda get this done over, four weekends or something, is gonna be a great strategy for you. if you can build out y- an IKEA closet system or an IKEA kitchen, then those are great strategies of, things you can do after you finish... After you move into the home, you can do these, within the next couple months, and those would be also great strategies. But you, not only do you have to, be a little bit handy to do these things, but you also have to have a lot of patience to do these things. This is gonna work better for somebody who, is a good planner, has patience, a little bit of, construction skills management skills, 'cause you could also subcontract this stuff out. yeah. So if you fall into that category, this is probably something you wanna consider. also, let me leave you with one more thing. This is a grander scheme, of this whole phased developments concept, and this is one we do quite a lot. somebody wants to do an addition on their home, they also wanna do an ADU. So we plan the whole thing up front, and then we permit the addition to their home the future idea that in, five years they're gonna build an ADU. Or also, sometimes we build the ADU and permit the ADU first, but we've left space for a future addition to the home. So I guess, the moral of the story here is there's lots of scales you can apply this, ultimately, if you have the patience, management skills or the construction skills, and you really need to get into a home in San Diego, is your avenue to do that.

23:40BaileyYeah, and I think you also need to find these home improvement, home construction type projects fun, like something you're gonna actually look forward to doing with on, on the weekends. Some people find this stuff fun. Some people would much rather just, you know, set it and forget it when it comes to moving into their home.

But you mentioned all the different schemes. I'll also, you know, link a bunch of recent episodes we've done about how to, you know, creative ways to actually enter into the housing market in San Diego, because, you know, it's very expensive obviously. Then you tack on the interest rates at the moment, and you really do need to get creative in order to purchase a home in a much different way than it was, like, 30 or 40 years ago.

So anything else you wanna touch on before we talk about how people can get in contact with you before, if they're interested in, in a project like this?

24:24Sean CanningNo, that's it. the goal here is to provide more creative solutions, the box solutions, so people can make housing work in San Diego, specifically the city of San Diego, where it's just becoming out of reach for most- mostly the average person. so if you have a project that you're considering like this and you wanna get in touch with me, the best way to do this is visit the website 1070architecture.com.

You can fill out the project survey at the bottom of the website, and we'll do a no obligation virtual meeting. wanna see some more of our work, check out the Instagram @1070architecture and of course, go through the rest of the videos on this YouTube channel 'cause we've gone over a whole bunch of strategies, different ways to permit a project, different ways to build a project, different ways to design a project. So if you're into that type of stuff, I think you're f- you'll find a lot more of that content on this YouTube channel

25:10BaileyYeah, everything will be linked in the description below as well as Sean's contact info. So thanks for watching everyone. Like, comment, subscribe. We'll see you in the next one