ADU – What to Know

One of the hottest properties in real estate right now is the ADU (or Accessory Dwelling Unit). These small and often self-contained units on lots with single-family homes, whether built from scratch or transforming an underused garage, are reimagined as in-law spaces (aka the granny flat), short-term rental units, home offices, private yoga studios, and more. Kad Investments, LLC, can make this happen for you.

ADUs have the potential to increase property values and generate income for homeowners while providing a solution to C.A.’s housing shortage. “If you’re thinking about a long-term strategy to offset the cost of your house or renovation,” says Karl Vinder. “ADUs can provide a potential revenue stream in terms of rental space.”

With a few key law changes in recent years, we have seen a 15-fold increase in ADU permit applications in 2017. As of September 2018, almost 8,000 property owners had ADU conversion or building permits submitted to the department.

Here’s a guide to get you on the ADU bandwagon:

What is an ADU?

It is increasingly coming up as an interest, either as a standalone project or rolled into a bigger renovation, Depending on where you are and who you ask, the definition of an ADU can differ in detail, but the gist of it remains the same.

The State describes an ADU as “a self-contained housing unit located on the same property as a single-family home.” UCLA’s CityLab, states that it must include amenities such as a kitchenette, bathroom, and living area as well as a separate entrance.

California’s Department of Housing and Community Development puts the square footage of an ADU at “generally up to 1,200 square feet.” However, some cities have that square foot maximum at much less, such as 650 square feet for the City of Santa Monica and 600 square feet in Glendale. So, it’s worth becoming acquainted with how your local area defines an ADU.

While many Angelenos are incorporating bathrooms and kitchens into their ADUs, others drop them to keep the project simple with a minimum price tag and instead use them as a private gym or office. “More people are working from home, so having a workspace that is separate from the home is a big advantage.

These units can either be attached to the main residence by adding a self-contained unit and another entrance or detached, so a completely separate structure to the house. Homeowners have converted their garages or pool houses into ADUs or built a second story on the garage to accommodate an ADU. In other words, there are many ways to interpret what an ADU can look like for your property.

Why are ADUs so popular right now?

In 2016, California passed a statewide law that made building ADUs or converting an existing structure into one, a lot easier. The new law requires all local governments to allow ADUs in all areas zoned for single-family use.

Parking & ADUs

Rules governing mandatory off-street parking, a major hurdle for potential ADUs, were also relaxed. Now, on-site parking is not required if the property is within a half-mile of a bus or train station, or if it is located within one block of a car-share vehicle, according to CityLab’s guide to building an ADU.

Making ADUs legal

At the beginning of 2019, the state of California passed another ADU-friendly law. Those homeowners who illegally built ADUs without permits now have the opportunity to make it right without penalty. As an added bonus, the illegal ADU will be measured against the building standards that were in effect at the time the structure was built. These statewide laws were either adopted by counties or modified by certain municipalities, so make sure you check out what it means for your property.

The state made a mandate that every building department had to come up with its own streamlined process for approving these projects. It needed to be easier than permits for building a new house or a major addition.

ADUS & Housing shortage

There is a chronic housing shortage in California. Sharp increases in real estate values have made that shortage dire. The ADU has been billed as a solution to this. A pilot program is also underway to help build a small sample of ADUs that will house those who are homeless.

Not only is an ADU an additional home for a single person, couple, or young family, but the small living space translates to lower rent. This either keeps residents in a neighborhood they would otherwise be priced out of or provides a home for a young person or student on a small budget. ADUs also generate income for homeowners, taking the pressure off mortgage repayments.

But it is not all love for the ADU. Some residents have voiced concern that an influx of granny flats will change the nature of neighborhoods. Since on-site parking is not a requirement in some areas, it could increase pressure on on-street parking as well.

Some also use their ADUs for short-term rentals on sites like Airbnb, sparking debate over how the community benefits as a whole. While this can create more income than long-term rentals, it doesn’t abet the housing shortage for those who call L.A. home. Some areas, especially those heavy with Airbnb rentals like Santa Monica and Long Beach, have banned short-term rentals in many ADUs.

ADUs sound great. I want one. How much will it cost?

Kad Investments, LLC has worked on projects that range from about $50,000 to over $200,000, with plenty in between. A major factor of how much your ADU will cost will be based on what you have to work with—for example, are you converting a garage that is close to electrical and plumbing hookups?—as well as what bells and whistle you want.

If you are planning a garage conversion, the state of your garage will play a big factor in project cost, according to Karl. Is there drywall? Are there any utilities? If there are, do they need to be upgraded to support a fully contained unit? Does the roof need replacing?  A garage isn’t always something that homeowners focus on because it housed their car.

Another factor to consider is the style and finish of the original home on the property. If the original house is a high-end property, then the ADU has to correspond.

Whatever way you slice it, an ADU can add to your lifestyle as a home office, fitness studio, or meditation room while adding to your property’s value. The monetary benefits only increase if it is a self-contained unit that you choose to rent out.

If you’re looking to add an ADU to your home in the Thousand Oaks/Hidden Hills area, or the general Conejo Valley area. Give us a call at Kad Investments, LLC