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New SB-684 Homes Are Prime Rental Investments

High land costs and zoning restrictions have made housing development in California challenging, but SB-684 has changed the game. This law makes it easier to subdivide smaller lots and build additional homes, creating new opportunities for small-scale investors while supporting cities’ push for more diverse housing options.

What is SB-684?

SB-684 simplifies the approval process for small housing projects, specifically those with up to 10 units on urban lots under five acres. Cities now have just 60 days to approve these projects, skipping public hearings and discretionary reviews. Plus, key regulations like the California Environmental Quality Act (CEQA) don’t apply, making the process much faster.

From what we’ve seen, many landlords hesitate to build new housing projects due to the complexity of approvals and financial risk. SB-684 helps address these concerns by streamlining the lot-splitting process, offering a more straightforward path for small-scale investment.

The Best Locations Have High Demand and Growth

“Location, location, location” still drives real estate success, and SB-684 developments are no exception. Properties eligible under this bill are typically in high-demand urban areas, offering investors strong opportunities.

Emerging Neighborhoods

Just as developers target up-and-coming areas for large projects, SB-684 allows small-scale investors to establish housing in neighborhoods poised for growth.

Access to Transportation

Proximity to public transit and major highways makes properties more attractive to renters. Urban dwellers prioritize convenience, and SB-684-eligible lots in well-connected areas will see strong demand.

Walkability and Amenities

Renters want easy access to shopping, dining, entertainment, and employment hubs. Small-scale projects under SB-684 can capitalize on these factors, making them highly desirable rental options.

For example, a young professional struggling to find affordable housing near public transit finds a newly built triplex under SB-684 in a prime location. They rent one of the units, securing a convenient and reasonably priced place to live, while the investor benefits from strong rental demand and long-term appreciation.

SB-684 Rentals Attract Tenants

Urban centers attract steady rental demand, and SB-684 properties fit a variety of needs:

Medium-Term Rentals

Professionals, students, and traveling workers often need furnished rentals for a few months. SB-684 units near business districts, universities, and hospitals are ideal for this market.

Long-Term Rentals

With rising housing demand, well-located SB-684 developments can provide stable rental income and long-term appreciation.

Investors Can Now Save Time and Money

Compared to large multifamily developments, SB-684 projects offer a more accessible entry point:

Lower Land and Construction Costs

Smaller lots and unit counts make these projects more affordable than traditional multifamily developments.

Fewer Regulatory Limitations

Without discretionary reviews or CEQA requirements, investors save time and money on approvals.

Faster Project Timelines

The mandated 60-day approval process speeds up development, reducing carrying costs and allowing rental income sooner.

An investor looking to enter the housing market used to face high land costs and complicated approvals. Before SB-684, they might have needed a large lot, possibly costing $60,000, to build a single home or go through expensive rezoning for higher density. Now, they can buy a 10,000 sq. ft. lot and split it into three parcels of about 3,300 sq. ft. each.

Instead of financing one large project, they can build three smaller homes, each costing around $1.6 million. The streamlined 60-day approval process cuts entitlement costs and saves months of development time. Once completed, each home could generate around $3,000 per month in rental income, allowing the investor to quickly recoup costs and reinvest.

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Reduced Maintenance and Boost Cash Flow

SB-684 properties offer a streamlined ownership experience with fewer ongoing costs:

New Construction Benefits

Newer buildings require fewer repairs and maintenance compared to older properties, saving landlords money over time.

Energy Efficiency

Modern construction standards focus on sustainability, reducing utility costs.

Minimal Capital Expenditures

With brand-new infrastructure, investors can allocate funds toward growth rather than major repairs.

A newlywed couple buys a brand-new duplex built under SB-684. Unlike older homes with moldy drywall and outdated flooring, their new property requires little maintenance. Energy-efficient features help keep utility bills low, and by renting out the other unit, they offset a large portion of their mortgage—making homeownership more affordable while building equity.

SB-684 Opens the Door to Profitable Housing Projects

SB-684 creates unique opportunities for small-scale investors to develop housing in prime urban locations with minimal red tape. By taking advantage of strong rental demand, strategic locations, and lower investment costs, landlords can create profitable rental properties with fewer hurdles. For those looking for a high-demand real estate investment with a simplified approval process, SB-684 developments offer a compelling path forward.