Should You Build An ADU On Your Property?

Published on May 17, 2021


Because of the housing shortage in California, the state legislature passed a number of laws making it easier for owners of single family homes to build accessory dwelling units on their properties. The new laws effectively allow for a total of three units to exist on each lot. The three units can be the main property, an ADU, and a junior ADU. 

What is an ADU?

An ADU is an independent residential dwelling unit that is on the same lot as a detached single family home and is often referred to as a granny flat. A junior ADU is an ADU that is smaller than the standard ADU with a square footage up to 500. They are a part of the home and cannot be sold separately, but they can be rented separately from the main house. One part of the home that is commonly used to build a junior ADU because of its size and dimensions is the two car garage. 

Why build an ADU?

Adding one or two units to your home can allow a homeowner to create additional income if they are living in the main home, or if they are renting out the main house. A major change with the new ADU laws in California is that for the five years after the law was put into effect, the owner of the property doesn’t need to live on site in order to build and lease one or two accessory dwelling units.  It is uncertain what will happen after the five years, but this means landlords have a short window to increase their rental income on all of their properties. 

What are the regulations?

Some of the changes in the law allow for an ADU to be built closer to the property line, but requires a four foot setback. Local jurisdictions are also forced to increase the minimum size homeowners are allowed to build. You are allowed to build an ADU 50 percent of the square footage of the main house up to 1,200 square feet. The minimum size they have to approve even if your home is less than 1,600 square feet is 800 square feet. HOA’s also can no longer prohibit the construction of any ADU or junior ADU on your property. When converting a garage to an ADU or adding an ADU, local jurisdictions cannot require those off street spots for the main unit to be replaced. Depending on location, some accessory dwelling units won’t require off street parking. For example, if the unit is within a half mile of public transit, off street parking is not required.

Getting approval

The new laws have also cut the permit approval duration in half. The law requires local governments to approve permits for an ADU within 60 days instead of 120. Through bill 12, there is also an impact fee reduction and anything under 750 square feet cannot be assessed an impact fee. Some local jurisdictions have pre-approved ADU’s to choose from. This can speed up the process for building an ADU on your property. What many of the new laws around accessory dwelling units have done is to reduce the ability for local governments and jurisdictions to block home owners from building more units to lease on their property.  

Cost of building an ADU 

There are all kinds of variables when it comes to the cost of building an ADU. There are the costs of labor and materials which can change depending on a number of factors such as supply of labor in your region as well as tariffs on construction materials. The cost per square foot could be roughly around 150-250 dollars. Other costs would include architectural, engineering, financing, legal as well as any pre and post construction expenses like permits and metering for gas and electric. Many of these costs differ by location so it is important to consult with your local jurisdiction or hire a contractor to help sort everything out. You can also search on the internet to find architects that have basic designs you can use as a starting point.  

At the end of the day, depending on lot size and shape, almost anyone who owns a single family home in California can now add a one bedroom unit as well as a small studio to rent. Considering the high cost of rent and the supply shortage of rentals, this is a great way to generate even more revenue out of the land you already own and it is worth contacting experts in your area to see if it makes sense for you and your property

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