ZA Memorandum No. 143: How to Put 4 Units on a Single-Family Lot in Los Angeles with No Lot Split

Most investors buying single-family homes in Los Angeles add one ADU and call it a day. They have no idea there's a City of LA planning memorandum that lets you put four units on that same lot — and that one of those units has no square footage cap.

It's called ZA Memorandum No. 143, and it's the best-kept secret in LA real estate investing right now.

What Is ZA Memorandum No. 143?

ZA Memo 143 is a City of Los Angeles planning directive that spells out the development standards for ADUs and JADUs in the city. It was updated to stay consistent with California's state ADU laws as amended through 2025, and it includes the combination tables that show exactly how ADUs interact with other housing types on a lot.

The part that matters is what happens when you combine an SB9 unit with an existing single-family home. Per the memorandum, that combination reclassifies the property as multifamily. And once it's multifamily, you unlock a completely different set of ADU allowances — including the ability to add two ADUs instead of one, with the state-mandated ADU carrying no size restriction.

That's the play.

The 4-Unit Formula

Here's how it breaks down on a single lot in the City of Los Angeles:

Unit 1: The existing single-family home. Your starting point. A standard SFR on a qualifying lot.

Unit 2: The SB9 unit. Under Senate Bill 9, you add a second primary unit to the lot. This is not an ADU — it's a full primary dwelling that gets appraised and valued the same as the original home. The moment this unit is on the lot, the property is now classified as a two-unit development. Per city code, that's multifamily.

This is where the magic happens. Once the lot is multifamily, ZA Memo 143's combination tables allow you to add two ADUs — a city ADU and a state ADU.

Unit 3: The city ADU. This is the ADU permitted under the city's local ordinance, subject to the city's standard size caps and setback requirements.

Unit 4: The state ADU. This is the California state-mandated ADU that every jurisdiction is required to allow on multifamily properties. Here's the kicker: the state ADU on a multifamily lot has no square footage cap. No size restriction. You can build it as large as the lot and setbacks allow. That means more bedrooms, more rent, and a dramatically better return than the single ADU most investors settle for.

The result: four income-producing units on one lot, with the state ADU potentially being the highest-grossing unit on the property because of its unrestricted size.

What This Looks Like on an Actual Lot Plan

LA lot plan designers like @lalotplans are already drawing these configurations. One common approach: convert the front attached garage into an ADU. Since it's attached to the main house, the SB9 unit creates a duplex on the lot. Now that the lot is multifamily, you place two ADUs in the rear — the city ADU and the state ADU — with parking laid out along the side. Four units, plenty of parking, and each one with functional separation so tenants feel like they have their own space.

This is not theoretical. These lot plans are getting approved and built in Los Angeles right now. The investors who know about ZA Memo 143 are the ones submitting them.

Real Numbers: What the Income Jump Looks Like

I've seen this play out in Lakewood and other LA County neighborhoods. Here's a real example from a property I evaluated:

A traditional single-family home was originally renting for $3,500 per month. The owner added an SB9 unit and ADUs. The property now generates $11,000 per month — more than three times the original income, on the same lot, without buying additional land.

That kind of income jump changes every metric that matters: cash-on-cash return, cap rate, and total property value. When appraisers value these properties, they use the income approach because comparable sales for SB9-plus-ADU properties are still limited. In Lakewood, I've seen these trading at roughly a 5.5 percent cap rate based on verified rent comps — not the inflated numbers listing agents put on the MLS.

Why the Multifamily Reclassification Is Everything

The reclassification from single-family to multifamily is the entire strategy. Without it, you're limited to one ADU on a single-family lot with standard city size caps. With it, you get two ADUs — and the state ADU has no size limit.

Two ADUs instead of one. On a single-family lot, you get one ADU. Period. Once the SB9 unit reclassifies the lot as multifamily, the combination tables in ZA Memo 143 open up the second ADU slot. That's an entire additional income stream that doesn't exist without the reclassification.

No square footage cap on the state ADU. This is the part most people miss. The state-mandated ADU on a multifamily property is not subject to the size restrictions that apply to single-family ADUs. You can build it as large as the site allows. On an oversized lot, that could mean a full three-bedroom unit generating rent comparable to the main home.

Better appraisal treatment. A four-unit property appraised under the income approach gets valued based on what it produces. If you're generating $11,000 per month in rent, the property's value reflects that income stream — not just what comparable single-family homes sold for down the street.

How to Check If Your Property Qualifies

Not every lot in LA qualifies for the full four-unit play. You need to confirm two things:

SB9 eligibility. Use ZIMAS to check whether the property meets the requirements under Senate Bill 9. The property must sit in a single-family residential zone (A1, A2, RA, RE, RS, R1, RU, RZ, or RW), be within half a mile of transit, and not fall within certain hazard or historic overlay zones. The ZIMAS checklist takes about sixty seconds — I wrote a full walkthrough on how to use ZIMAS to check SB9 eligibility if you haven't done it before.

Lot feasibility for four units. Even if SB9 checks out, you need enough lot area to physically fit all four units with code-compliant setbacks, parking, and access. Corner lots and oversized parcels above 6,500 square feet tend to work best. I always have my designer run a feasibility report during escrow so we know exactly what the site can support before we close.

The Two SB9 Paths — and Which One Gets You to 4 Units Faster

SB9 with lot split. You split the parcel and place the SB9 unit on the new lot. Requires you to intend to reside in one of the units for three years. Cities drag this out — plan on roughly a year. It's like the early days of ADU permitting when cities were still figuring out how to process applications.

SB9 without lot split. The parcel stays intact. You add the SB9 unit alongside the original home, then layer on the two ADUs per ZA Memo 143. About six months, no residency requirement, and the cleaner path to the four-unit configuration.

For most investors, the no-lot-split path is the better play. Faster timeline, no occupancy strings, same income upside.

What to Watch For

Timeline expectations. The SB9 unit alone takes around six months on the no-lot-split path. Add the ADU design and construction timeline — typically seven to twelve months — and you're looking at a twelve-to-eighteen month project from purchase to full income. Budget your reserves accordingly.

Rent verification. Listing agents routinely inflate projected rents on SB9 properties to support the price. Always pull your own comps. On the Hedda Street property in Lakewood, the listing projected $12,800 per month. My comps came back at $11,200 — a $1,600 per month difference that shifted the cap rate from 6.2 percent to 5.5 percent and knocked $80,000 off the realistic purchase price.

City-specific rules. ZA Memo 143 applies to the City of Los Angeles. If the property is in unincorporated LA County or a different incorporated city, the ADU combination rules may differ. Check LA County Planning's SB9 page for county-specific guidance.

Work with a lot plan designer who knows the play. Not every designer understands how SB9 reclassification opens up the two-ADU allowance. You want someone who has already gotten these four-unit configurations approved — designers like @lalotplans in LA are already drawing and getting these approved.

The Bottom Line

ZA Memorandum No. 143 is the playbook for turning a single-family lot in Los Angeles into a four-unit income property. The formula is: existing SFR plus SB9 unit makes it multifamily, which unlocks two ADUs — a city ADU and a state ADU with no size cap. That's four units on one lot.

The investors who already know this are generating three to four times the cash flow of a traditional single-family rental, on the same lots, in the same neighborhoods. They didn't find a secret market. They read the memorandum.

If you want help evaluating an SB9-plus-ADU play in Los Angeles, DM me on Instagram or download the ADU Buyers Guide to start running the numbers.