What Is An ADU?
Today we’re going to talk about ADU’s. What they are, where to get information about how to add one to your property, the benefit of adding one to your home, and the expenses for one.
An ADU by definition is an auxiliary dwelling unit. A great way to look that up is you can look at the California department of housing, you can just google ADU. There’s a lot of nicknames for ADU’s that you might be more familiar with such as, guest house, granny unit, second dwelling unit. Officially the terminology within the law in respect to a second rentable unit on your single family residential property is ADU or auxiliary dwelling unit. You’re going to hear a lot about these. A lot of people are using these for extended family living needs and also for basically development needs in the neighborhood. So one of the things to consider is you’re now able to modify an existing let’s say two or three car garage, particularly if it’s free standing, you can convert it into an auxiliary dwelling unit. We can help you with that because there’s lots of requirements associated with that. If you have a need for additional housing or you have family members that are moving into your home but you each would like to have your own private space this is a great way to do it. Some of these laws related to ADU’s have just been put in place. This is why it’s a new term, a new concept and many people are not really familiar with it. It’s a great way to add value to your property if you have a senior living alone or a couple that would like to live in a smaller place. You are limited up to 1,200 square feet but the interesting thing is you can effectively have living space that’s maybe approaching 2,000 if the lot coverage will allow it. It works really well to do a 1,200 square foot home which is very inexpensive to maintain high energy efficiency and then you can do large patios, maybe even a covered garage or covered garage port, upgrade it to additional space. So there’s lot of ways that we can help you maximize that usable space and still fit in the ADU criteria with the state. It’s very interesting because it is so new there’s many cities that are not really sure what’s appropriate because from a planning standpoint, what happens is it’s increasing the density of the number of people living in the city. So the cost of utilities and services, the load or use on local parks, the fire department, the police, ambulance, etc. those things all go up. The law restricts the cities from charging additional excessive fees in order to build an ADU because from a state point of view we have a housing crisis and this is the quickest way to solve or reduce that issue. Or put it this way, increasing the supply of housing is to modify or increase the density on single family residents. So it’s a really big deal in order to help solve that problem, lower the cost of living for your family unit, and in fact they even wrote into the ADU laws that you are now allowed to rent it out to a third party. Up until this recent ADU law, if you were going to build a guest house or secondary dwelling unit you were required to not only live in it as a primary residence but you had to have a family member live in it. This is no longer the case. So we’d like to encourage you to check it out on the state website. Just look up California accessible dwelling units, ADU, so you can look up California ADU laws and requirements. They website will give you example ordinances. It is a little bit of a minefield because it’s new laws and every planning department deals with them differently. The one thing that we want to stress is that we can help you with that and we can do an assessment and analysis for your programming of your ADU. We would say in most cases within probably about 5 hours of work. We like to encourage you to check with us. We can do a feasibility study with that limited time and fee. It might be a great way to answer the hundreds of questions that you probably have. If you’re considering to do an auxiliary dwelling unit or build onto your home and you haven’t done that in the past, what we like to di is take the pizza pie and cut it into sections so that they are bite sized and easy to work with. So do an analysis, ask us, we’ll help you do an analysis at a very low fee. If you decide to move forward with a project we can apply that analysis fee to the total project and help you complete it, get it approved, and get it built. So in recap, we have a housing crisis in California. We don’t have enough places to build new homes because of the infrastructure required. You have to put in roads, curbs, gutters, etc. just to get a lot that’s buildable on. We believe it’s over $50,000 just to get a piece of property ready and then there are permit fees and school fees. Something else that not everybody knows about is mello-roos which is an added tax on top of your property tax to pay for those improvements in new community areas. So you need to be aware of all of that. That’s one of the things we do for you on a specific analysis of a program on a particular piece of property, because every property and every setback is different, and there’s a lot of nuances in this new law. And each of the planning departments has a little bit of a different take on it.
If you were to convert your garage into an ADU, let’s just say it was a three car garage that is detached, we have a lot of those in the Rancho Cucamonga, Upland, and Claremont area. So you can take your garage and turn it into an auxiliary dwelling unit and you are not required to build another garage. Most people don’t realize that so you’ve got a property that actually has a roof and four walls on it, maybe it’s 600-650 square feet we can add to it and increase the size, but all of a sudden you take a structure that probably has stuff stored in it and you can modify that so it becomes an income producing piece of your property. In effect right now the interest rates are so low you may be able to reduce your mortgage rate just by adding an ADU into an existing portion of your home by probably half or maybe three quarters. We can help you with those specifics. We can go over it and compare the cost of construction versus the retail value in your area. Plus we can look at the rentable market value in your area and help you with that. We can look at redfin or Zillow to get some of that information.
We have an example below of a large new home that the property owners requested that we include in the home a layout for an ADU. They are going to be having their parents living with them but they wanted them to be in a separate area to have their own privacy.
There’s a lot of benefits to that with the new law. We also want to mention with the ADU law, you’re now allowed to have a separate entrance and you do not have to be connected to the main house. This used to be one of the things the planning department always required. But that is no longer the case. We highlighted that area to show the auxiliary dwelling unit. the one thing that I want to mention is that you’re limited to 1,200 square feet under this law. But like we said you are able to have your own separate entrance. In the case with this home we actually have an entrance that’s connected so that they can get to the main house. This is a very large home but they have their own ADU on the main level, access to the pool. They have all the benefits of the primary home owner but they also have their own private space.
We’ll be providing some upgraded insulation in there so that there’s pretty good sound resistance between the main home and ADU. We also added a pocket so it actually probably going to be a double door from the entrance of the main home to the guest house. So it’s like a sound barrier between the two spaces. That can be done in a brand new home. Another option is to modify an existing home. You can develop an ADU if you have a two story house and you don’t like going up and down the stairs anymore, you can split it horizontally. We can help you modify the stairs so that you can have a new separate entrance on the floor that does not have to connect to where your stairs are on your existing first floor, take that space out for the stairs on the first floor and use it for something else and have two units instead of one. You live on the bottom one and rent the second floor out. We haven’t seen that happen too much lately but it’s a great idea. It’s another way to apply the laws that give you the flexibility of developing two units on your property without actually adding more square footage to your existing house. If you have for example a 3,000 square foot house, there’s two of you in there and it happens to be two story’s and you are only effectively living on the first floor, why not split out the second floor, create an ADU, and have the people above pay for your mortgage. You then get to live practically mortgage free on the first floor in maybe 1,500-1,800 square feet and they’re living on the second floor in about 1,200 square feet. You may have seen this done on HGTV. They do this a lot in some of the areas where there’s basements.
If you happen to have a basement and that’s an underutilized space, that space can be upgraded to an ADU. We can help show you how that can be done. The change in the economics for property owners who do this is phenomenal. And of course once you have two units on a piece of property, the property then will appraise higher if you ever want to sell and move to a new location.
Back to basements for just a second. We have an internal standing joke because we’re in Southern California and any time our chief architect Dale talks to somebody about adding or modifying to their home he always likes to ask them if they’d like to have a basement. Of course the other guys on our team are always hit their head and say don’t ask that question. The reason is it’s a little bit more work but there’s a couple really interesting things associated with it. Basements are not taxed if they’re not conditioned space such as if they’re used for storage. So in effect you get free use of covered or enclosed space storage without having to pay the square foot property tax on it. The same thing applies to attics. Attics are not taxed because it’s not in the general living space. Now you can always upgrade those later to add them and they become part of the living space of the home and increase the value of the home or you can just use them as like a man cave or storage. But the question about putting a basement in is the reason most homes in Southern California do not have basements is because most of those homes do not have a frost line. A frost line, which is typical in the Midwest if you’ve ever lived out there, some frost lines 38 inches to 48 inches deep. Which means that the bottom of the footing on the foundation itself, the footings, has to be below that frost line. There’s a little bit of a safety factor because if it’s not below the frost line when the ground freezes it will literally heave the entire foundation out of the ground. So for California, many people think you can’t built basements because of earthquakes. If you go downtown to Los Angeles you can see six to maybe ten stories of underground parking structures. Now those are pretty expensive but they also have maybe 75 stories of building above it. That’s the only way they could get their parking requirements meet so they have to go down. You can see that basements are possible. If you choose to do a basement but leave it unconditioned and use as storage space, the nice thing is that it can always be converted into an ADU if you have the proper exiting and proper lighting. So hopefully that answers some of the basics on ADU and even covers a little extra on frost line.
How do you know you can add an ADU onto your house/property and where can you get that information?
We can help you establish a program because there’s lots of different reasons for ADU’s, different layouts, and different concepts. Basically we would develop a program through questioning and getting some feedback from you to the extent that you know what you want. If you don’t know what you want we’ll do a brainstorming session with you to get to that fairly quickly. Some of the these that you should consider at least, let us know if it is going to be for third party rental, we’ll treat it a little differently. Do you want connection between the ADU and main house? Because maybe it’s going to be family members you have living there. Are you going to share the kitchen? These are some of the types of questions we will ask you that are somewhat subtle design elements. Some questions that have come up in the past projects are, do you want a stacked washer and dryer in the ADU? Do you want to share the laundry room with the ADU space or does it need to be separate? So there’s quite a few questions and things that we would draw out to develop a program. One other thing that comes to mind is you are allowed to build up to 1,200 square feet on the property but there are few restrictions and we have to go over that in specifics. One of the things that pops up is that you’re limited to 50% of the primary unit size. So actually what comes to mind which is kind of interesting, what happens if you take a 750 square feet home and then build a 1,200 square foot home behind it. The one behind can be the primary unit and the smaller unit could be the guest unit and you get past that restriction for a unit that could maybe only be 360 square feet.
Something we found out was happening in planning departments is they will pile additional restrictions on what you can build on your piece of property. For example, this one gentleman we met had an acre and a third and a 3,500 square foot house. He wanted to build an ADU on his property and rent out the main house. Well at the time the planning department said our ordinances restrict you to 350 square feet for an ADU. So the gentleman is thinking that doesn’t make an sense, I’ve got plenty of room. I’m pretty sure that the law allows me to build up to 1,200 square feet on that property. So one the property size is large enough and two the planning department can’t over restrict based on state requirements or codes of ADU. This is why it’s so important to understand what those ADU requirements are. We bump up against this all the time. Every city right now is a little different and they’re kind of working their way through restrictions so we have to politely share with them what our understanding is. You’re probably going to need someone who’s in the business of architecture and construction and that knows the language to go with you or for you to the city department. We find quite often that if you’re not in the business it can be very difficult to know the right questions to ask or the right words to say. If you talk to the planning department, and no criticism of them they’re trying to apply the ordinances to the way they’ve been adopted by city council or the county commissioner, but in some cases they’re overreaching in terms of the restrictions that they’re placing on ADU’s. Particularly right now cause the law is new so there’s all kinds of creative things we can do with ADU’s. Talk to us about it and we’ll do in the first phase a feasibility study quickly. Like we say in some cases that can be four or five hours so you’re not committed to a major project. It may be a great way to get started on developing a program specific to your property. So we’d be happy to help you with that.
What are the benefits of building an ADU? Why should you build one?
A couple things that come to mind is you generally can bypass the planning department with only a few restrictions so you don’t have that long period of time. So it’s designed to be able to build it quicker and it’s designed to be able to be built as long as you build it similar in architectural style to the existing house. We need to match the finishes and colors of the main home. There are some restrictions. ADU’s area a smaller, easier build that are typically limited to one story, 16 feet high. Generally speaking 16 feet will be the height although we do believe you’re also allowed to add a second story on some of the tighter properties. If we remember correctly, the minimum lot size for an ADU is generally around 5,000 square feet. That may have changed but at one point that was it. That’s a pretty small lot. Most lots in the rural areas around where we are anywhere from Riverside to say maybe Covina or Pasadena are larger than 5,000 square feet. Some are not so we’d have to look at that specifically. That’s easy to get with your APN number which is your assessors parcel number. You can get that from the county and it will give you the property dimensions and we can calculate the square footage of your lot very quickly. That’s something we do on an initial assessment. ADU’s offer a lot of benefits such as, being able to take care of and have family near by. They’re great to use as a rental unit. You can rent it out and have an additional income or have the ADU pay for all or the majority of your main home. We can get into more detail with you about all the things ADU’s can do for you.
Are ADU’s generally expensive? Or does it just come down to the materials and things you put into the project?
This is an interesting question. Cost is somewhat relative to value. We like to compare the cost of an ADU to the cost of a couple going into a retirement senior center. Just a normal fee for a nice facility is based anywhere from $5,000-$7,000 a month. That’s if they’re going into a retirement center and that generally includes housing, meals, and stuff like that. Now imagine what you can do if you have an ADU that your family members can move in to then you can provide outside assistance maybe medical care or nursing part time and also meals. So if you compare the value, one you’re investing in your own property, your family members are investing in property that will retain equity within the family as opposed to giving it to someone else, and two it’s a fraction of the cost even if the price of construction is let’s say $200,000 for a 1,000 square feet which is $200 a square foot. That price is less than if you look at todays interest rates, which by the way they’re very competitive and they’re getting better. But on today’s interest rate that would be less than a $1,000 a month mortgage. So that gives you about $6,000 a month to set aside. If you apply that $6,000 a month to that mortgage you’ll have that mortgage paid off in about five years and you’ll be way ahead of the game because the value will be retained in the family equity. So every situation is different and we’ll have to take a look at that with you. But there is a lot of value in maximizing your property whether it’s for extended family members or a third-party investment. If you can enter a property, realize it has the ability to add an ADU to the property, you’ve just increased the value of it by whatever the square foot value is in your area. That’s another quick analysis we can do for you on initial study. Hopefully that’s helpful. So we’ve covered the basics on ADU and we’ll get into some of the more specifics and the way the actual state law is written so that we can compare that. So that you will know when you go to talk to the planning department, hopefully you’ll bring us with you, but when we talk to the planning department we will know your specific situation and circumstances and we will be able to apply intelligent questions to expedite the project. That’s the whole point, because if you just go in there and ask the city, the building department, the planning department, or engineering you’re going to get a different answer from every one of them. So we kind of corral them and get an accurate answer on your specific piece of property. Great way to go. Not too big a commitment to get started. You may not be aware but you’re able to hire architects on a consultant basis. It does not have to be all or nothing. We can take it step by step. We want to help you get your project going, maximize the value of your real estate, and move on from there. Please contact us if you have any questions. We’d love to answer them for you!