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The accessory dwelling unit (ADU) market has boomed over the last 5 years and it is becoming one for the best investment opportunities available to property owners in San Diego. So why are ADUs so special? There are many different things that an ADU can provide that make it such a great investment for your family. ADUs are becoming even more popular, and it isn't hard to see why. An accessory dwelling unit gives you all the comforts of home in a compact space which makes it the perfect solution for a rental property or guests house. Not only do ADUs make life easier, but they give you the opportunity to make extra income while dramatically increasing the value of your property. Building an ADU on your property has many different benefits from instant equity to steady cash flow, and below, you can see why you should build an ADU on your property.
We understand that the answers can be a bit long, but it is important that you understand just how big of an opportunity building an accessory dwelling unit (ADU) can be for families in San Diego, CA.
ADUs are any additional housing structure that is built on a property that already has a primary home or dwelling. These types of tiny homes can come in a wide variety of shapes and sizes while being completely customizable. ADUs have many other names that they are referred to as such as granny flats, guest houses, and in-law suites. No matter what name they go by, they all have the same structure and purpose. These homes have many benefits for you and can be built on both single-family and multi-family lots. ADUs have their own entrances as well as other spaces such as bathrooms, kitchens, and living areas. In addition, ADUs can either be attached or detached. When they are detached that means that they stand alone while the attached option is like converting a garage. For a more detailed comparison of attached vs detached ADUs, please click here.
These granny flats have become increasingly popular for many different reasons, whether you are looking for passive rental income or want the perfect guest house for friends and family. Accessory dwelling units are the best opportunity to add value to your home while allowing you to make a profit. ADUs can be used for a lot of different reasons, which is why they have become so popular over the past couple of years.
Building an ADU has never been easier since a new package of bills was passed in January of 2020. Now, in California, you can enjoy this luxury tiny home and all the benefits it has to offer because of this new series of bills. Some of the new laws include the ADU permits and how they will be automatically approved for single-family homes and can also be built on multi-family homes.
The new laws that have been put into place make building ADUs legal on a state level which invalidates any city ordinances. Not only do these new laws permit the rebuilding of ADUs, but they also make the whole process a lot easier. You can now build an ADU in an HOAs without any hassle and cities have to approve ADU applications within 60 days. Other burdens that have been lifted by these new laws include that ADUs built by 2025 don't require the owner to live at the property and ADUs can be developed at the same time as the primary housing unit. With all these new laws in effect, it has never been easier to gain the permits you need and build the perfect ADU to fit your needs.
When it comes to real estate, the averages are pretty high when living in San Diego. The average real estate costs in San Diego are around $829k, and rent can cost as much as $2600 a month for a two to a three-bedroom apartment. So as a homeowner, one of the best decisions you can make is to invest in your home.
With California’s new laws about ADUs, homeowners can get instant equity just by adding an ADU to their property. These units offer an affordable way to increase cash flow. For example, starting costs only range from $350-$450 per square foot, ADUs will pay for themselves. Suppose we build an ADU on your property that adds a monthly loan payment of $2000 to your mortgage. With that in mind, you can charge a monthly rent amount of $3000, giving you a profit of $1000 every month. Another way to utilize your ADU is using it as an AirBnB to add additional cash flow to your investment.
Another great benefit of these units is that they add a tremendous amount of value to your home. By building an ADU on your property, your home's equity will drastically increase. The equity of your home is the difference between what your home is worth and the amount that you still owe on the property. Here is San Diego, and ADU will add about 150% of the total costs in equity once the ADU is built. For example, if you build a 750 square foot ADU on your property for construction costs of $400/sq ft. This will make the total $300,000 which will then make your property value go up to approximately $450,000 on completion of the project. Now that is an instant ROI!
When building the perfect ADU you can expect to spend between $350-$450 per square foot in the San Diego area. Typically, this price will decrease as the project gets larger simply because of the fixed costs that are associated with building an ADU, no matter the size. If the ADU you want to build is larger you can expect a larger return on investment when it comes to potential rental income and property value. Keep in mind, our company is a one-stop shop that will be involved in the entire process from start to finish.
When it comes to building an ADU, not everyone has the cash on hand to pay for the construction. Fortunately, there are many different ways to finance your ADU with many lending options to choose from. Banks realize how much an ADU will increase your property value, making it a low-risk investment for them. For a more detailed explanation of financial options, click here.
Nursing homes on average cost around $11,000 a month for a private room in San Diego. When you have loved ones who need professional nursing care, this cost can be expensive. Luckily, ADUs can help you avoid these costly monthly expenses. Your ADU can act as a suite for your loved ones who need this care.
ADU financing options range anywhere from $1,500 and $2,500 a month (depending on the size and specifications of your ADU at $350-$450/sq ft). Compared to paying $11,000 or more in nursing home costs each month, you can save a fortune while also benefiting not just your property, but your family as well. In addition, using your ADU as an alternative to a nursing home will give you more time to spend with your loved one and afford them all the comforts of home.
Another great use for your ADU is a guest house. Whether you frequently have friends and family over that need a place to stay or want a "staycation" away from your primary residence, an ADU is perfect. In addition, just because you use your ADU as a guest house doesn't mean you have to give up the opportunity to make extra income. For example, you can use your ADU as an AirBnB to rent out to guests between visits from your friends and family. The average AirBnB in the San Diego area cost around $120 to $150 per night. Simply renting out your ADU a few nights a month can easily cover your loan payment just by the rental payment alone. If you rent more than just to cover the payment of your loan, all of that income is simply cash in your pocket. now you have a way to gain income and have a place for family and friends to stay as well.
If you want more information about building the perfect ADU for your property, contact us today!
No matter what type of ADU you are looking to build on your property, our team has the necessary resources, skills, and experience to make it happen all while fitting into your budget. We are committed to providing the most positive customer experience for each of our clients from beginning to end.
Whether you want to increase your cash flow with a rental property or need an alternative to prevent a loved one from going to a nursing home, our team can help! With the many possibilities, you have to increase cash flow as well as increase your property value, and ADU is one investment you shouldn't pass up. Call us today to learn more about ADUs and receive a free estimate.
STEP 1
The first step in the development phase is to establish clear goals. Decide why it is you want to build an ADU on your property. Are you looking for supplemental rental income? Do you want a new guest house for family and friends? Are you trying to avoid the cost and discomfort of putting a loved one in a nursing home? Whatever your reason may be, it is important that you establish it. In addition, you will want to make a plan for your design such as the aesthetics, how many bedrooms you want, how many bathrooms are needed, and any other additions to your ADU. Having established goals is a great way to help us create your perfect ADU design.
STEP 2
This next step is crucial for when it comes to paying for your ADU. First, you need to decide how you will be financing this project. For example, will it be out of pocket or with a financial institution? Next, we will evaluate the property depending on whether the ADU is going to be attached or detached. Finally, we will do a market analysis so we can see how much equity this ADU project could add to your home. When you have this information, you get a more established budget to work with on your ADU project.
STEP 3
Once the site of your ADU is evaluated, and you now have the budget to work with, it is time to start the design phase. Our team will work closely with you to design the best ADU that fits your needs as well as your budget. We stick by your side through the design phase in all aspects from floors to roofs and windows. You can count on our experienced design team to give you the ADU of your dreams!
STEP 4
After the design phase is complete, we can bid on the project. After this you can take our bid to the lender, should you require one. This bid is our reasonable estimate of how much this ADU project will cost to complete as well as giving detailed information on the price of every aspect of your construction project.
STEP 5
Lastly, we will secure all the permits that are necessary to build your ADU on your property and begin the construction phase. Our team has all the necessary skills and experience to construct your ADU from top to bottom to all your desired specifications.
STEP 6
Once your ADU project is finished, the property value will increase substantially in comparison to the amount you paid. Furthermore, you will now have a completely customized space that can be used for family and friends to come to visit or even generate income.
One of the most time-consuming parts of building an ADU is the permitting process. When someone in San Diego city or the surrounding county needs questions answered, it is a lot faster to only have to deal with one company so they can answer all questions and handle all the permits needed.
When you have a specific question or concern about your accessory dwelling unit, it can be confusing to know who to speak to. Design changes can affect the budget just as construction costs can often affect designs. Having everyone on the same page with these changes can be challenging. When you work with our company, you can rest easy knowing that you will have a direct line of communication so your questions can be answered as quickly as possible.
Working with a single company that will handle all the design aspects and the construction of your ADU eliminates delays and misunderstandings that often happen with the back and forth of other companies. When multiple companies work together on the same project a lot of information can get lost in the hustle and bustle. It is estimated that working with our company can make the process of building an ADU 25% faster.
Each company has a certain amount of overhead costs and desired margins and those costs get passed along to their customers. Working with a company like ours for the development of your ADU will help shave off those extra costs so you will have those savings passed to you for more money in your pocket.
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One of the most budget-friendly ways that homeowners in San Diego build ADUs on their property is with an attached ADU. Attached ADUs are exactly as the name sounds, they are attached to the home either being built off an exterior wall, a basement conversion, or a garage conversion. Attached ADUs typically require less materials as well as less work. As a result, this style of ADU is often more affordable than that of a detached ADU. In addition, this is one of the fastest and easiest ways to create a new ADU. We have much to offer in the style, size, and floor plan of your attached ADU. Our design team can help customize your ADU to your personalized style and tastes. Our company specializes in the design and construction of these dwellings, whether detached or attached. Even if you have a garage that is filled with unorganized storage that is simply collecting dust, we can turn it into a beautiful accessory dwelling unit. A basement conversion is another great option for an attached ADU. With both of these options, many of the plumbing and electrical accesses are already in place and only a little work is needed in comparison to that of a detached ADU. No matter what your needs are, our team is here to work with you from start to finish to design the perfect attached ADU to fit all your needs.
A detached accessory dwelling unit is an ADU that is built on a property that isn't actually connected to your home. Though a detached ADU is usually more expensive and time-consuming, it can give you a lot more customization options than an attached ADU. Since we don't have to work with an already existing structure there are more design options available such as style, size, colors materials, and more. No matter if you are looking for a more straightforward design that will match the color and architecture of your home or are looking to make a bold statement with something different, our team is here to help you make it happen. In addition, ADUs that are detached gives you more flexibility. For example, if you have the room on your property to work with, our team can build you a 1,200 square foot ADU to fit all your needs. You can count on our team of experienced ADU builders to work with you from the design phase to the build to ensure you have an ADU that will fit all your needs and specifications.
Our company offers a range of great lending partners who can help you in every way with funding your next ADU project. If you want to build an ADU on your property, you shouldn't let the financial aspect of it hold you back. Don't let uncertainties prevent you from contacting us! We can help you navigate through all our different financing options, find what fits you best, and start financing your project. Remember, over time your ADU will pay for itself with the right strategy and even give you additional income.
When you choose the cash out refinance option to fund your next ADU project, you will be utilizing the equity of your home. Remember, your home equity is the difference between what your home is valued at and the amount you still have left to pay. You'll cash out your equity and refinance your mortgage. This style of financing offers you low-interest rates, and in no time you should be able to earn enough income on the ADU to more than cover your additional payment to the bank.
HELOC stands for a Home Equity Line Of Credit. This financing option involves giving a homeowner a line of credit that works much like a credit card. This line of credit is based on the equity of their home. These loans have a variable interest which means at any point during the term of the loan agreement. With the HELOC loan, you only pay interest on the money used from the line of credit rather than having a lump sum that you pay interest on throughout the agreement. These loans typically have a 20-25 year payoff.
If you don't have equity in your home to use, a construction loan will be the best option for you. These loans are based partially on equity but mostly on income and credit score. This process involves refinancing your mortgage based on the future projected value of the property after the ADU is built. These construction loans are short-term loans that have high interest, but they are the best option for homeowners that don't have home equity to work with yet. The process entails submitting the loan application and if approved, you don't get the money until a contractor gives a detailed estimate. That's where our company can help. Our team will ensure the design of your ADU fits your loan budget, and once you're approved, you'll reappraise and refinance your home.
“When I needed a new guest house for friends and family, I couldn’t believe how easy the process was from the deigning to the financing this team can help with every aspect of building the ADU”
Amber Blevins
"When I needed a place for my mother-in-law to stay for an assisted living, I was so scared I would need to put her in a nursing home. One call to this company and they had the perfect solution. Not only did we save money with this ADU, but we get to spend more family time with her.”
Joey King
"This company was so helpful when I wanted more information about building an ADU on my property. Not only did they give me different design ideas, but they have many different financing options available. Great company to work with!”
Carol Elmer
Visit our blog for more information on how an ADU can instantly increase your property value while bringing in passive income for your family.
We are the highest rated Accessory Dwelling Unit (ADU) builder in the San Diego area for custom ADUs. We’ve been in the ADU business for more than 6 years, and we do it well.