One home in your property is good but having one more is even better. Think of an extra space in your property that you can use to house guests and visitors. You could even rent it out for some additional income.
In most states in the United States, especially in California, this is gaining a lot of popularity with the help of an Accessory Dwelling Unit (ADU).
Now, these are not new concepts as they have been called other names in the past, like granny flats and in-law suites— however, their function stays the same in that they are these small, self-contained living things found on the same lot as your primary home.
For those unfamiliar with these, you might ask yourself, what is this, and why should I care? Well, you are in the right place as we will give you all you need to know about Accessory Dwelling Units, let us get into it!
Financial Benefits of Building an ADU
We understand that financial considerations are crucial when making decisions about your home. That’s why we’ve highlighted the financial benefits of ADUs upfront. Here are some of the ways an ADU can contribute to your financial well-being and create value for your community:
Boosting Your Property Value
First and foremost, let’s talk about the impact on your home’s value. Adding an ADU can significantly increase your property’s worth. The exact increase will depend on factors like location and the ADU’s design, so consulting with professionals is always recommended for a personalized estimate.
Think of it this way: potential buyers are often willing to pay a premium for homes with ADUs because they see the potential for rental income or the flexibility of additional living space. In many cases, the value added by an ADU can even surpass the cost of construction, making it a wise investment.
In the competitive California real estate market, an ADU can make your property stand out from the crowd. The LA Times reports that having an ADU can boost your property value by approximately 24% compared to a single-family home. While this figure is specific to LA County, it illustrates the significant potential for increased value across the state.
Beyond financial gains, remember that ADUs can also foster stronger communities. By providing affordable housing options, you’re not only building your financial security but also contributing to a more vibrant and inclusive neighborhood.
Building Community, Building Financial Security
Beyond just financial gain, let’s explore how ADUs can contribute to both your financial well-being and the strength of your community. Renting out your ADU can create a steady income stream, helping offset construction costs, contribute to your mortgage, or simply provide extra breathing room in your budget each month.
In many California communities, the demand for affordable housing is high, and ADUs offer a solution. Depending on your location, you could potentially earn between $1,500 to $3,500 per month in rent. Imagine the positive impact this could have on your financial goals!
For instance, consider this couple who transformed their property and their community. They now rent their ADU for an impressive $4,500 per month! While this is certainly on the higher end, it showcases the potential of ADUs, especially in high-demand areas like Los Angeles County. Their success demonstrates that with careful planning and consideration of local conditions, you too can create a space that benefits both your finances and your neighborhood.
If you’re curious about the rental potential in your area, we’ve created a dedicated article breaking down the specifics. It’s a valuable resource as you weigh the possibilities and envision the ADU that aligns with your goals and values.
Remember, ADUs aren’t just about generating income; they’re about creating vibrant, inclusive communities. Whether you’re providing housing for a local teacher, a young family, or an aging relative, you’re contributing to the fabric of your neighborhood in a meaningful way.
ADUs VS. Traditional Houses
There is always an initial investment needed when you want to start a housing project; however, the cost varies exponentially when you build a new, traditional house from scratch compared to when you build an ADU.
Traditional additions can be pricey, especially when you factor in the costs of foundation work, roofing, and other structural elements. An ADU, on the other hand, is a separate unit that can be built more efficiently and at a lower cost per square foot.
On average, the cost of building an ADU in California ranges from $100,000 to $250,000, depending on the size and complexity. Compare that to a major home addition, which can easily exceed $300,000. Plus, with an ADU, you get the added benefit of potential rental income, which can offset the construction costs over time.
Key Components
Firstly, we have to establish the fact that an ADU, that is, a secondary housing unit on any residential zoned lot, should have several components that make it what it is; they are as follows:
First, it must have a separate entrance so the residents can come and go without entering the main house. Once inside, there should be a kitchenette or a full kitchen that allows for meal preparation.
For obvious reasons, it should also have a bathroom and, lastly, a living space. It is important to note that you can mix the sleeping quarters with the living space to maximize the use of space; however, separating them for some privacy is also a good choice.
Size Matters
Since they are only secondary to your main home, they must be limited in size. These limits can vary from state to state, depending on the regulations put in place by the local government. For example, Californian Homeowners can have a detached ADU that can only be 1,200 square feet at maximum. On the other hand, an attached ADU should only be 50% of the primary home’s size.
On the other hand, Los Angeles County, for example, is mostly the same; however, for the detached ADUs, they have no maximum and allow for an additional 150 square feet to accommodate ingress and egress. You can access this resource here if you are interested in the nitty-gritty of Los Angeles County regulations.
In terms of Junior ADUs, the size constraint is a lot smaller and is only limited to up to 500 square feet. This applies to both California state in general and Los Angeles County. However, you also have to consider that some counties have slightly different regulations, so it is always a good idea to check beforehand.
Types of Accessory Dwelling Units
Detached ADUs
Detached ADUs are standalone structures similar to tiny homes built on the same property as your main house. However, they differ from these tiny houses and can be considered a stand-alone unit, while an ADU needs an existing primary residence. Also, they have different building codes and regulations. With that said, the fact still stays that they are general the same in terms of function and size.
Focusing more on Detached ADUs, these units offer a lot of privacy since they’re separate from the main residence. They often have their own entrance, kitchen, and bathroom, making them perfect for use as rental units, guest houses, or private spaces for family members.
Because they’re separate from the main house, they provide more independence and can be designed to match or complement your existing home style. However, building a detached ADU can be more expensive due to the need for new foundations, utilities, and construction materials.
One advantage of detached ADUs is the potential to increase your property value. Since they’re independent living spaces, they can attract potential buyers looking for additional income opportunities or multi-generational living arrangements.
The rental income from a detached ADU can also help you offset mortgage payments should you decide to rent it out, making home ownership more affordable. Take for example a certain Amy from a certain facebook group named Santa Cruz (California) Housing, she has a 600 square foot ADU that she is putting up for rent for $2,300 a month. Considering the costs of building the unit, it would be at around a couple of thousands of dollars– perhaps around $100,000 as a rough ball park estimate. It would take only 43 months to get a return on investment. Past that, Amy would get passive income monthly, so it definitely is a good way to invest! You an read more about Amy’s post here.
Attached ADUs
Attached ADUs are connected to the main house, such as a converted attached garage or an added-on apartment. These units are typically less expensive to build than detached ADUs because they share some structural elements with the main house, such as walls and roofing.
This can make them a more affordable option for those who want to add extra living space without breaking the bank. Additionally, attached ADUs can be designed to blend seamlessly with the existing home, maintaining the property’s overall aesthetic.
Despite being connected to the main house, attached ADUs can still provide privacy. With their entrance and amenities, they can function as separate living spaces for tenants, extended family, or guests.
This makes them an excellent option for generating rental income or providing housing for family members while keeping everyone close.
Converted ADUs
Converted ADUs involve using existing space within the main house, like a basement or attic. This type of ADU is often the most cost-effective option since it repurposes already-built areas, reducing the need for extensive construction work.
Homeowners can maximize their property’s potential without significant expenses by transforming underutilized spaces into functional living areas. These conversions can be tailored to meet various needs, from creating rental units to providing additional space for family members.
One of the biggest advantages of converted ADUs is their ability to enhance the functionality of a home. For example, a basement conversion can offer a spacious, private living area, while an attic conversion can create a cozy, secluded retreat.
These projects can also be completed relatively quickly compared to building new structures, allowing homeowners to enjoy the benefits sooner.
Garage Conversion ADU
Garage Conversion ADUs are converted ADUs and are the most popular among conversions. These units transform an existing garage into a livable space, efficiently using the existing structure. Garage conversions are often more straightforward and less costly than building new additions, as the basic framework is already there.
Homeowners can convert garages into studios, one-bedroom apartments, or even larger units, depending on the size of the garage. A key benefit of garage conversion ADUs is their ability to provide additional living space without significantly altering the property’s footprint. This makes them ideal for urban areas where space is limited. A great example of this would be the one as stated in the LA Times where they converted a garage into an ADU with a budget of $300,000. They found great use for it as they let their parents stay in the finished unit and they said they fel fortunate to having that space, especially during the lockdown, as it helped their family stay together despite it all.
Moreover, converting a garage into an ADU can enhance the property’s overall functionality and value. With proper insulation, lighting, and design, a garage can be transformed into a comfortable and attractive living area that meets various needs.
Junior ADU (JADU)
Junior ADUs are also converted ADUs but are smaller, at most 500 square feet. These units are typically created by converting interior spaces within the main house, such as a bedroom or a part of the living area.
JADUs are an excellent option for homeowners who need additional living space but have limited budgets or available land. They can serve as guest rooms, home offices, or small rental units, offering flexibility and utility without major construction costs.
Due to their smaller size, JADUs can be more easily integrated into the existing layout of a home. They often share some amenities with the main house, such as bathrooms or kitchens, which helps keep costs down.
The Appeal of ADUs in California
Statewide ADU-Friendly Laws
Just recently, in 2023, the California State made it so much easier for homeowners such as yourselves to build an ADU because of the more relaxed regulations compared to the previous years and a more streamlined process to get permits. The following are some of the changes:
Better Height Restrictions: Previously ADU height was limited to about 16 feet, now, taller ones can be built depending on circumstances.
Building in A Front Setback: Local governments no longer have the right to deny your ADU application if you go past a front setback when building you 8 square feet ADU. This is so much better for homeowners with smaller background spaces as they can now build ADUs for themselves.
Better Application Processes: Getting your permit application denied is not an easy thing, however with the new laws in place,your local government will now be required to give you a detailed list of what went wrong with your application. Think of it as a guide for you to do better next time as you will know which areas you will have to focus on.
The Benefits Of ADUs For Homeowners
With the loosed regulations for building an ADU in California, perhaps it is in your best interest to build one because of the various benefits that it can give, here are some of them:
Financial Benefits: ADUs can generate rental income, increasing overall property value and providing a steady revenue stream.
Personal Use: Homeowners can use ADUs as guest houses, home offices, or personal studios, adding flexible space to their property.
Multigenerational Living: ADUs are perfect for housing aging parents or adult children, allowing families to stay close while maintaining privacy.
Sustainability: ADUs typically have a smaller environmental footprint compared to traditional homes, due to the lesser energy costs and size.
Increased Property Value: The addition of an ADU can significantly boost the market value of a property, making it a smart investment for homeowners.
Marketability: There is a huge market for ADUs for rent especially in the California State and Los Angeles County which you can see all over Facebook. So profit is just waiting for you should you know how to look!
Is an ADU Right for You?
While ADUs indeed have several benefits, you still have to consider a lot of things before actually committing to the whole bit, here are some things that you should consider:
Costs and ROI
Unfortunate as it may sound, nothing comes cheap, and so does building an ADU. You have to consider carefully if it is within your means to commit to the costs of planning and building it. After all, there are a lot of miscellaneous fees and expenses that come with it including permits and utilities, to name a few.
On the other side of this, you can also have great return on investment as property is always a lucrative investment because it is always in demand. You can either rent it out for a steady income flow or should you decide to move, then you can use it to increase the value of your property and get bigger gains when you close off the sale.
Zoning Laws and Regulations
While we have mentioned some of the general laws and regulations, there might still be some that we have missed especially for those local counties that may or may not have slightly different iterations of the one regulations we have stated. But it a nutshell, it’s almost always possible to build an ADU in your residential property,
It is always better for you to personally check it with your local building department office or you can check out this self-help guide so you can make sure that you are doing everything right and within local regulations.
Property Size and Layout
The Probability of building an ADU largely depends on your property’s size and layout. Ypu should consider whether your lot has enough space for a new structure and how it will fit with the existing buildings and landscape.
This ties in with the size limitations that we have mentioned before son make sure that you review them properly and consult with the proper professionals. This will make the whole process faster and easier for both you and your contractors.
Your Personal Goals for the ADU
Determine your primary reasons for building an ADU. Are you looking to provide housing for family members, generate rental income, or create a private workspace?
Your goals will influence the design, size, and features of the ADU. For example, a rental unit might require more amenities compared to a home office or guest suite.
Next Steps
With all that said, there really is a whole lot more to learn and consider about ADUs—things like the regulations in your area and even design options should you decide to have one built. We have barely touched the surface, so we highly encourage you to learn more.
If this has piqued your interest, then we here at Yifu Design Studios are more than willing to help answer your questions, so do not ever hesitate to request a free ADU consultation with a licensed architect or call us at 626-660-0206. See you then!
