How Can an ADU Add Value to Your Home/Property?

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The concept of ADUs (accessory dwelling units) is gaining popularity as the demand for affordable housing has increased, the housing market prices have also increased. Due to this, ADU housing has made it possible for homeowners to add value to their properties.

03/14/2023

In California an Accessory Dwelling Unit (ADU) is defined as an attached or a detached residential dwelling unit

That provides complete independent living facilities for one or more persons and is located on a lot with a proposed or existing primary residence.

By: San Diego BR

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ADUs offer an affordable type of home to construct in California because they do not require paying for land, major new infrastructure, structured parking, or elevators.

These small spaces with highly customizable designs help homeowners recognize the true potential of their backyard space. Ultimately, ADUs are revolutionizing San Diegans’ backyard spaces and redefining home ownership.

Constructing your own ADU unit is an efficient real estate investment strategy. ADUs are the latest big thing that provides options to generate consistent revenue through rental opportunities while adding value to the overall property.

ADU’s can also provide housing for aging or disabled relatives or young adult family members. They allow extended families members to be near one another while maintaining privacy.

Through this blog, you’ll get a detailed understanding of ADU-related topics like:

Overview of the ADU concept
What are the pros and cons of having an ADU?
How can Homeowners Finance an ADU?
Different types of accessory dwelling units
How does ADUs add value to home/property?
Additional information about designing an ADU.

The Trend of ADU

Homeowners might wonder whether adding accessory dwelling units is a suitable choice. While different ADUs have different profit margins, a well-built ADU will always bring in some type of value.

ADU construction has become so widespread that professionals state that dwelling units are not a temporary trend. These considerations are the results of the various functionalities of accessory dwelling units.

ADU, as a spacing concept, is so flexible that it serves potential economic benefits along with the fulfillment of intergenerational housing for homeowners.

ADUs are also known as carriage houses, granny flats, backyard casitas, secondary dwelling units, or in-law units

ADUs can be created in a land space away from the main house or attached to a part of the house. The primary house provides the connection of daily resources to the ADUs, like water, gas, and electricity supply.

Modern ADU

In times of economic challenges across the country, ADUs have become an efficient investment. It has also become an ideal option to combat housing shortage issues. ADUs became a way for people to have access affordable housing options.

Homeowners with good housing potential can expand their resources through ADUs without restrictions. In recent times, these small units can range anywhere from 500 to 1000 square feet.

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What Are the Pros and Cons of Building an ADU?

There are numerous factors that dictate whether having an ADU will be profitable. Some of the pros and possible cons of having an ADU are as follows:

*Pros*	*Cons*
ADUs can be used as rentals to generate income or house aging family members.	It may take up too much space making the lot look crowded.
ADUs often add value to homes/properties.	Generate additional spend for regular maintenance.
It can be a good addition for a guest house, work-from-home space, or kid’s playroom.	ADUs can increase property taxes limiting the overall profits.
ADUs have versatile usage.	Homeowners risk losing storage spaces like storage rooms or a garage.
It is a good way to encourage economic diversity in a community.	Several states may have regulations restricting homeowners from building an ADU. It comes with complicated steps and hefty permission fees.
Homeowners can create studio workspaces for different types of creative activities.	ADU homeowners can face design constraints if they do not carefully plan their ADU design models.
Many homeowners put in a lot of creativity to create an ADU space that can be used for multi-purpose use.	Poor ADU planning can further create complications in utility connection. It includes sewer, water, and electricity facilities.

Before You Build Accessory Dwelling Units:

Make sure you check the local zoning ordinance of San Diego County.
Remember to evaluate possible taxation consequences, maintenance costs, and up-front costs.
Understand rental and housing market regulations to make informed decisions.
Investigate closely to determine if you are taking lawful steps in adding an ADU to your property.
Consult with a lawyer or a real estate agent to be sure that you are abiding by state regulations.
Contacting a local design build general contractor in San Diego helps determine the cost of building an accessory dwelling unit. You can get information and advice from experts at San Diego Building and Renovation to determine whether an ADU is the move for you. San Diego Building and Renovation can help you with designs, ideas, and renovations.

How Can Homeowners Finance ADUs?

There are a range of options one can consider when it comes to affording an ADU. Financing an ADU can be complex and but San Diego Building and Renovation can guide you every step of the way. They make it easy and affordable with financing options that fit every individual’s needs.

Explore Financial Support

Homeowners looking for financial support to build ADUs can consider options like taking out renovation loans or refinancing in case of existing equity. This financial support can be a great option. It is also easy to pay them off as ADUs can generate passive incomes easily.

Keep Track of The Housing Market

As mentioned above, learning about the latest housing market trends can help you make informed decisions. Further, it can also ease extreme property taxation due to the addition of a new space. To understand various market conditions, homeowners can also take consultations from experts like San Diego Building and Renovation.

Determine the Yearly ADU Income

Individuals who want to invest in ADUs for rentals should calculate the profit that would be generated ahead of time. Financial advisors can provide accurate data to homeowners to see where they stand in terms of a profitable investment.

The value of ADUs varies depending on what a homeowner is willing to invest.

What Are the Different Types of ADUs?

Picking the appropriate style of ADU matters, as these small units can change the home’s value. San Diego Building and Renovation can help you determine the design and style of the ADU to fit your property’s aesthetic.

Some of the top and primary forms of ADU types are:

Attached

Attached ADUs, called granny flats, are added to the primary house. It upgrades the existing space. According to experts, it is the second most valued ADU type. This ADU type may not be for everyone because it offers less privacy than detached ADUs.

The value of an attached ADU is often less than a detached one due to the ADU ordinance affecting the permitted square footage. This means an attached dwelling unit can only increase the primary home’s space by 50%.

Detached

This form of ADU is separate from the primary home. It is the most valuable ADU when constructed in the right way. Many rental opportunities can be easily achieved through detached ADU. It adds overall value to a home, since detached spaces are additional livable spaces adding to the habitable square footage.

ADUs impact the residence’s overall value and offers the tenant desired home space.

Garage Conversion

Garage conversion ADUs are considered one of the most affordable types of ADUs. This is possible because garages are already existing structures. Therefore, it helps homeowners save money and avoid additional construction fees. The project’s timeline is often less than other ADUs.

Garage conversions are not required to follow all the legal guidelines that detached ADUs follow. Whether detached or attached, the existing garage structure is free from any legal restrictions and requirements.

Garage Conversions can add value to your home without having to spend as much as attached and detached ADUS.

Do ADUs Add Value to Home/ Property?

It is no secret that accessory dwelling units are taking over the home design business. ADUs are not only a good source of income, but it allows homeowners to enjoy extra space for storage or socializing activities. There are countless reasons people opt for accessory dwelling units on their property. ADUs have a very versatile use and style to match anyone’s needs.

But what benefits do ADUs provide? How much does it impact the value of a house? These additional units are known to give good ROI value to homeowners. Accessory dwelling units are:

An efficient way to maintain the intergenerational lifestyle. Whether taking care of your parents or other family members, the accessory dwelling unit, like a garage or basement conversion, has been considered very useful.
In some cases, homeowners choose to age in a smaller space. Given this, they choose to put their primary space for rentals and stay in an ADU. This is an efficient approach for generating income during old age.
ADUs add both social and economic value. Given its impactful importance, California cities are tasked with building over 2.5 million housing units by 2031.
Many accessory-dwelling experts often suggest that the money invested in ADUs is not comparable to the passive income or better returns it can generate. These small units possess much potential for lucrative earnings.

The quality of materials used to build the structure decides the overall value of your ADU. Therefore, homeowners who want a good return on investment from ADU should focus more on constructing quality ADU.

Ready to Build an Accessory Dwelling Unit?

In San Diego, an ADU is a viable source of income and adds value to your home. If you are a homeowner looking to build an ADU, San Diego Building and Renovation is here to help you. Our team of designers, contractors, and project managers have extensive experience in building ADUs in San Diego. They are also experts in home remodeling, construction, home additions, and new home constructions. Contact us today to speak to our ADU specialist about creating your ADU.

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