Do You ADU? Learn How to Make Your Property Work for You
A light-filled ADU in Oakland, designed by Inspired ADUs.
Granny flat. In-law unit. Guest house. Accessory Dwelling Unit. ADU.
Whatever you call it, it’s the smartest way to invest in your property and expand living space without spending tons of time and money on contractors, permits, and red tape.
We are seeing a surge of savvy Bay Area homeowners taking advantage of sweeping changes in California legislation that took effect on Jan. 1, 2020 to make building ADUs easier.
These small, self-contained units are supported by legislators, housing advocates, and real estate agents alike because they are considered a key solution to our housing shortage.
ADUs are a relatively painless and efficient way to increase housing density while also giving homeowners the things they want – extra space, rental income, and enhanced property value.
Whether constructed simply for economical tiny-house living or designed like a chic dream cottage, accessory dwelling units are taking shape in backyards, converted garages, basements, and in-home additions.
Architect Carrie Shores Diller of Inspired ADUs and a member of Berkeley’s ADU Task Force told us she is seeing a huge uptick in interest especially in San Jose, San Mateo County, Berkeley, and Oakland.
She said the majority of homeowners who contact her firm are most interested in adding multi-generational living space in their yards for aging parents or young adult children.
“It’s something that can evolve with your family as your needs change,” explained Carrie, who also works as an educator for Small Homes, Big Impact, an ADU-focused pilot program from the Housing Trust of Silicon Valley.
If you are considering putting your property to work for you by adding an ADU, read these FAQs and answers…
What is an ADU?
“Accessory dwelling unit” is a new name for an old idea – the granny flat or in-law unit. Under recently enacted California laws, an allowable secondary unit has these characteristics:
- Self-contained living space with its own entrance, bathroom, and kitchen.
- As small as 250 square feet and as large as 850 square feet, or 1,000 square feet if the ADU contains more than one bedroom. Individual cities may allow larger units, however, so check with your local planning department.
- Up to 16 feet tall.
Who is an ADU for?
- Aging parents
- In-home health care providers
- Young adult children
- Au pair child care providers
- Home-based workers
- Naughty spouses who landed in the “dog house.” (Just kidding… or not.)
There are three key reasons you should ADU:
1. Additional income
Bay Area rents are rising and availability is dropping, making this an ideal time to put your property to work by building a money-making rental unit. The average rent in Berkeley is $3,213, $2,935 in Oakland, and $2,506 in Walnut Creek, according to a report released this February by Rent Café, a nationwide apartment search website.
Another way to generate income with an ADU is to downsize out of your main home and move into your second unit. Then rent out the bigger house. Carrie said she has discussed this option recently with several senior clients who are seeking ways to fund their golden years.
Note that if you built your ADU on or after Jan. 1, 2020, when the latest state legislation took effect, you cannot legally market it as a short-term rental such as an Airbnb.
2. Multi-generational living
Recent surveys show that seniors increasingly prefer to age-in-place rather than move into a retirement facility, which could cost them more than $5,000 a month in the Bay Area. Some premier senior living communities require a buy-in fee of $1 million and up!
Building an ADU provides creative, flexible, and less expensive housing options for aging parents. They get to downsize and live independently while staying close to their loved ones for support.
On the other end of the age spectrum, an ADU is the answer for families with young adult children living at home. In California, nearly 40% of young people aged 18 to 34 haven’t left the nest, according to U.S. Census data.
Moving them into an ADU is a great way to give them – and you – space so you don’t drive each other crazy.
3. Increased property value
While it’s difficult to quantify exactly how much resale value an ADU adds to a property, anecdotal evidence shows that homes sold with secondary units have a higher return on investment. They are simply more attractive to buyers for all the reasons we note here.
One study of properties with ADUs in Portland, OR, found that ADUs contributed an average of 25%-34% of a property’s assessed value.
Worried about the construction costs? Don’t be. Carrie estimated the costs for free-standing ADU construction is $550 per square foot. In-home renovations can cost much more and require additional permitting, neighborhood notifications, and whole-house upgrades to meet building codes if the original structure is old.
How do I get on the ADU fast track?
Once upon a time, property owners had to tolerate drawn-out public hearings and permit reviews that took up to two years. High fees especially dented wallets. To encourage more people to build ADUs, state and local lawmakers cleared a lot of red tape in recent years. Now in California:
- Local planning agencies must approve or deny a permit application within 60 days.
- No neighbor notification or public review hearing is required.
- Design review is not required.
- Parking requirements are reduced to one space per bedroom or unit. Extra parking also is not mandated if the ADU is within a half mile from public transit, is located within one block of a car share area, in an architecturally and historically significant historic district, built within an existing primary residence or existing accessory structure, or in an area where on-street parking permits are required but not available to the occupant.
- Fire sprinklers are not required if they are not required in the primary residence.
- ADUs cannot be considered new residential uses for the purpose of calculating utility connection fees or capacity charges, including water and sewer service.
- State law prohibits cities from requiring a minimum lot size for ADUs up to 800 square feet.
- Side and rear set-back requirements are capped at 4 feet.
If you are considering adding an ADU to a property, give us a call. We can provide resources, referrals, and calculate your potential return on investment. We support turning NIMBYs into YIMBYs (Yes In My Back Yard). 888-400-ABIO (2246) or firstname.lastname@example.org