Discover Why An ADU Is Hottest Investment Any Homeowner Can Do Right Now.
What is an ADU?
An ADU is an Accessory Dwelling Unit that is attached or detached from the primary residence, also referred by some as a “Tiny Home”. It’s a fully functional home only a bit more cozy.
Why is Now a great time to consider building an ADU?
Right now anyone can take advantage of the laws, resources and programs to help reduce the costs associated with building an ADU. Let’s look at how:
- Many counties are providing free or low cost pre-approved plans. This will save thousands in architect fees an planning fees.
- No impact fees on homes under 750 sqft.
- CalHFA offered a $40,000 grant to qualified individuals for 2023.
- Federal laws have now made financing for an ADU more available.
Nearly any homeowner can now invest in an ADU and begin collecting rental income.
How much could I expect to earn from my ADU?
Let’s look an example of the costs to build an ADU and the potential income & wealth that may result. We will aim to provide accurate figures for this example, however we recommend the homeowners work with their contractors to provide them with best estimates possible. Success heavily depends on having an accurate estimate for your build! We would greatly appreciate the opportunity to estimate your project!
This example is to build a 2 bed / 1 bath ADU with 748 Sq/Ft.
$5,000 – Standard Plans
$4,000 – County Permits & Fees
$5,000 – Site Work – Prep Area For Foundation
$220,000 – Construction – Foundation To Finished Home
$10,000 – Utility Connections
$7,000 – Solar Installation
$251,000 – Total
$51,000 – Initial Capital Investment (Cash Down)
$200,000 – Financed At 7% 30 year / Conventional
$1,331 – Monthly Loan Payment (Loan Only)
$2,405 – Average Rent In California For A 2 Bedroom Home **
-$1,331 Monthly Loan Payment
– $350 Subtract Additional Expenses ( increase in property taxes, insurance, landlord utilities)
$724 Monthly Income
$724 a month x 12 Months = $8,688 Annual Earnings Before Taxes.
$8,688/$51,000 = 17% Annual ROI.
**average rent according to rentdata.org
17% Return On Investment Is Just The Start.
– The Rising Price Of Rent
– Home Value Appreciations
– Refinancing To A Lower Rate
These will all help get the home to pay for itself and build your wealth.
How Can I Get The Total Build Price Down?
You can save thousands taking advantage of the programs offered above. CalHFA can cover the predevelopment costs such as site prep, architectural designs, permits, soil tests, impact fees, property survey, and energy reports. We can help you navigate the process.
Or, see if your county offers any free preapproved plans. Architectural drawings can get costly, so be sure to check to see if you can take advantage of any benefit your area offers.
We can work with you on pricing to see which features you’d like to include and remove the ones you don’t.
Can I Sell The ADU by itself?
Yes! A recently passed bill allows homeowners to sell their ADU very similar to selling a condominium where as the property owner retains the land & imposes HOA fees.
Ready To Get Building?
Save Money Using One Of Our Models
Or
Bring Your Own Design And We’ll Build It
