How to Turn a Single Family Lot into Multiple Units: The SB 1123 Checklist Every Developer Needs

Featuring: Matt Baran, Architect and Founder of Baran Studio Architecture

On The Affordable Housing & Real Estate Investing Podcast, the best podcast for affordable housing investments hosted by Kent Fai He, returning guest Matt Baran, founder of Baran Studio Architecture, reveals the tactical blueprint every developer needs to understand California’s SB 1123 law.

If you’ve ever looked at a single family lot and wondered, “How do I turn this into multiple units?” — this episode breaks down exactly how. Matt and Kent walk through real examples, city checklists, and density calculations that most investors miss, explaining how to evaluate zoning, flood zones, fire maps, housing elements, and more to avoid deal-killing surprises.

This episode matters for developers, architects, and affordable housing advocates who want to build smart, legal, and profitable small-lot housing in California’s tightest markets.

What Is SB 1123 and Why Should Developers Care?

California’s SB 1123 is the 2025 update to last year’s SB 684, designed to make it easier for developers to subdivide and build on single family lots.

Under the new law:

• You can now subdivide single family (R1) lots, not just multifamily.
  
  

• You’re allowed to build up to 10 fee-simple units, depending on the site.
  
  

• The density limit is 66% of 30 dwelling units per acre (called Mullin Density).
  
  

“SB 684 used to only apply to multifamily zones,” Matt explained. “But SB 1123 expands that to single family zoning — as long as the property is vacant or has an uninhabitable unit.”

However, developers still need to pass multiple eligibility hurdles — including fire risk, flood zones, and affordable housing overlays — before breaking ground.

How to Know If Your Lot Qualifies for SB 1123

Matt walked Kent through a live example using Los Angeles’ SeamlessGov portal, which provides zoning and eligibility data for any property.

Here’s his 5-step checklist that applies statewide:

1. Start with Zoning

• Identify if your site is R1 (single family) or RM (multifamily).
  
  

• SB 1123 now applies to both, but you must confirm the property’s official zoning and existing structures.
  
  

2. Run the A-BAG Checklist

• Use the Association of Bay Area Governments (A-BAG) checklist — a statewide model cities use to determine eligibility for SB 1123 or SB 684.
  
  

• You’ll verify if the site:
  
  

  • Is zoned correctly.
    
    

  • Has 10 or fewer parcels.
    
    

  • Meets setback, access, and fire-safety standards.
    
    

3. Check for Fire Hazard Severity Zones

• Properties in Very High Fire Hazard Severity Zones (VHFHSZ) are automatically disqualified from SB 1123 projects.
  
  

• Some cities still allow SB 9 developments in these zones, but SB 1123 is stricter.
  
  

“I pulled up a random parcel in Marina del Rey,” Matt said. “It looked perfect on paper, but it was in a high fire hazard zone. You can’t do SB 1123 there, but you might still do SB 9 or ADUs.”

4. Review Flood Zones

• If your lot lies in a 100-year floodplain, SB 1123 and SB 684 cannot be applied.
  
  

• Use FEMA maps or your city’s floodplain portal to check.
  
  

5. Confirm the Housing Element Designation

• If your site is tagged in your city’s Housing Element Plan, it may come with deed-restricted affordable requirements.
  
  

• That means you’ll need to include affordable units or pay impact fees, which can affect your pro forma.
  
  

“You don’t want to close on a lot and find out it’s designated for deed-restricted housing,” Matt warned. “That can kill your margins before you even start.”

How to Use the Remainder Lot Strategy to Qualify for SB 1123

One of the most valuable insights from Matt’s session is the remainder lot technique — a legal workaround for developers who exceed SB 1123’s density limits.

The Problem:

SB 1123 limits projects to 10 units per lot, but some large parcels automatically calculate above that threshold under the 66% density rule.

The Solution:

Carve off a “remainder lot” that meets minimum frontage, width, and area requirements. You then calculate density using the remainder of the property.

For example:

• A 25,555 sq ft lot at 66% of 30 units per acre equals 11.6 units, which exceeds the 10-unit cap.
  
  

• By creating a remainder parcel of about 7,000 sq ft, you reduce your density calculation base to 8.5 units, which qualifies under SB 1123.
  
  

“That remainder lot can’t just be a sliver of land,” Matt clarified. “It has to meet your city’s minimum lot size and frontage standards.”

This strategy lets developers legally “shrink” their project footprint without disqualifying the property — one of the most misunderstood tools in California infill housing.

What Developers Must Check Before Designing: Fire, Flood, and Utilities

Matt emphasized that even with SB 1123 eligibility, developers still need to verify infrastructure and access before designing.

• Utilities: Always assume the worst-case scenario for sewer laterals, water meters, and trenching costs.
  
  

• Fire Access: Verify hydrant distance, fire lane widths, and turnaround radii early.
  
  

• Flood or Drainage Requirements: Confirm no portion of your site triggers FEMA or local stormwater retention mandates.
  
  

“You might qualify under the law,” Matt said, “but if you can’t trench utilities or meet fire code, your project dies on paper.”

He advises developers to build 10–15% contingency into their pro forma for unexpected infrastructure costs — especially when subdividing fee-simple lots.

Designing for Livability and Profit: Why 20x40 Is the Magic Number

For architects and developers designing under SB 1123, Matt revealed his go-to formula: a 20 ft x 40 ft building footprint.

Each 800 sq ft footprint can comfortably fit:

• A two-car garage
  
  

• Three bedrooms and 2.5 baths
  
  

• Livable layouts that work within setback and height limits
  
  

“That 20x40 footprint is our building block,” Matt said. “It fits almost anywhere, meets density requirements, and still feels like a home.”

He also warns against over-densifying single family neighborhoods:

“Just because you can fit ten units doesn’t mean you should. Once your lots shrink below 2,000 square feet, it starts feeling like overkill.”

When SB 9, ADUs, or Density Bonuses Might Be Better Options

Even though SB 1123 offers the most flexibility, it’s not always the best path for every site. Matt explained how to pivot when eligibility issues arise.

Use SB 9 for Simpler Subdivisions

• Allows up to two lot splits and four total units.
  
  

• Still possible in some fire zones where SB 1123 is restricted.
  
  

• Be aware of 3-year ownership requirements (subject to future amendment).
  
  

Leverage ADUs for Infill Density

• Accessory Dwelling Units (ADUs) remain one of the easiest and fastest paths to add units.
  
  

• In multifamily zones, you can often add multiple ADUs based on site capacity.
  
  

Consider Density Bonus Programs

• By including deed-restricted affordable units, developers can request height, parking, and open-space waivers to boost yield.
  
  

• This requires careful pro forma modeling but can unlock significant upside in tight zoning markets.
  
  

Key Insights & Frameworks

• SB 1123 = Opportunity + Responsibility. It’s the most flexible housing law yet, but only if you know the rules.
  
  

• Remainder Lots Are Game-Changers. They can bring disqualified parcels back into eligibility.
  
  

• Fire, Flood, and Utilities Can Kill a Deal. Always verify before you buy.
  
  

• Design for the Market, Not Just Density. Livability sells faster than maximum yield.
  
  

• Documentation Builds Credibility. Partner with land-use attorneys to support your applications.
  
  

Best Quotes from Matt Baran

“You can’t treat these projects like plug-and-play deals. Every city has its own way of saying no.”

“A remainder lot can make or break your deal — but it has to be legal and logical.”

“People see a single family lot and think small. I see eight homes and a community.”

“The real risk isn’t the law, it’s the interpretation. That’s why you need professionals who’ve done it before.”

“If you close on land before checking fire and flood maps, you’re gambling with six figures.”

Common Questions About SB 1123

Q1. What’s the main difference between SB 684 and SB 1123?
SB 684 only applied to multifamily zones. SB 1123 now includes single family lots, allowing up to 10 fee-simple units if the property qualifies.

Q2. Can I build under SB 1123 if my property has an existing house?
Only if it’s uninhabitable. Otherwise, the site must be vacant for single family eligibility.

Q3. Can I use SB 1123 in a high fire hazard zone?
No. Those properties are excluded by law, though SB 9 or ADUs might still apply.

Q4. What is a remainder lot and why is it useful?
It’s a carve-out that reduces your total site area for density calculations, helping you stay under the 10-unit maximum.

Q5. How do inclusionary requirements affect my deal?
If your lot is tagged in a city’s housing element, you may need to build deed-restricted units or pay impact fees — factor that into your pro forma early.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments. Through in-depth conversations with experts like Matt Baran, Kent helps investors and city leaders understand how to use legislation like SB 1123 to unlock new housing opportunities across California.

DM me @kentfaiheon IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.