The Benefits and Possibilities of Accessory Dwelling Units (ADUs)

How to Navigate the ADU Building and Renting Process

By Brad Greiner, CEO of OpenAiRE Brokerage and Open Air Homes

 

Owning a home in California is a significant milestone, but the cost of homeownership can be burdensome. However, for those willing to consider innovative solutions, there’s one avenue that has been gaining traction through new CA regulation: Accessory Dwelling Units (ADUs). 

The Evolution of ADUs in California

Just a few years ago, adding an ADU to one’s property was a challenge. Between prohibitive local land-use rules, hefty permit fees, and building requirements, the concept was often deemed unattainable. 

However, driven by the pressing need for housing, California lawmakers began championing ADUs in 2017, removing many of these barriers. Now, if less burdensome criteria are met, including size restrictions and placement, homeowners have a clear pathway to secure a permit for an ADU. 

 

The Multi-Purpose Appeal of ADUs

What makes ADUs particularly compelling is their versatility. Here are some of the benefits and potential use cases:

• Long-term Rental Income: One of the most common motivations for homeowners is the potential for steady rental income. With an ADU, you have a legally separate unit that can be rented out, providing a consistent source of revenue and helping offset mortgage payments.

 

• Short-term Rental Potential: ADUs are the perfect 1 bedroom home for short term rentals.  A significant portion of our travelers at Open Air Homes are looking for one-bedroom units.  An added benefit?  Homeowners can still capitalize on using their ADU by blocking out specific dates or periods when family or friends are visiting.  No one wants to see their Aunt before coffee, and the ADU is the perfect space to house family when in town.  Short term rentals give you the ultimate flexibility to monetize when you want and block out dates to use.

 

• Flexibility in Living Arrangements: Should circumstances change, homeowners can move into the ADU themselves and rent out the main house. This could be particularly useful if a homeowner faces financial difficulties or if they simply prefer a more compact living space. Downsizing does not have to be burdensome, and you likely will learn a lot about yourself by living in a smaller space.  If you design your ADU right for your specific needs, an ADU can help to get you out of a tough financial situation.

 

• Transition with Changing Needs: The beauty of ADUs, as Robert Berry from ADU Homes in Long Beach points out in this article from the LA times, is their adaptability. Their use can change with the evolving needs of the property owner, be it multigenerational living or aging in place.

 

Factors to Consider Before Building an ADU

However, before taking the leap, it’s vital to understand the challenges:

1. Assess Your Goals: Before embarking on this project, it’s essential to recognize the specific needs you’re trying to address. Is it primarily for financial gains, family needs, or long-term planning? Our Real Estate Agents at OpenAiRE can help. 

 

2. Know the Costs: Building an ADU is a significant investment. Whether you’re considering a garage conversion or constructing a new structure, costs can escalate. The price isn’t just about the size but also the need for essentials like plumbing, electrical systems, and foundational requirements.

 

3. Navigating Permits: While the path to permitting has been streamlined, local regulations can still pose challenges. Each city may have different requirements, making it essential to research and consult experts in your area. Redondo Beach, for example, is fighting the state law in court, and their legislators are showing serious NIMBY signs. However, most cities have embraced the fact that ADUs are a significant step in the right direction to address housing.

 

4. Design Matters: While functionality is critical, aesthetics shouldn’t be overlooked. For the ADU to seamlessly integrate with your property and maintain property value, thoughtful design is paramount.  Two design tips: Whether you choose to go the short term or long term rental route, create a private entrance for your ADU.  Long term and short term tenants alike love the ability to access the unit without having to walk through your shared space.  If your space allows it, consider adding a walled off entrance, increase the privacy and value of your ADU.  Adding an outdoor seating space, especially in California, will also significantly increase the value of your ADU.

 

5. The Time Factor: Even if the construction is rapid, navigating through permits can take time. Homeowners should be prepared for a potentially prolonged timeline.

 

OpenAiRE is Here to Help You Find the Right Property 

ADUs offer a promising solution for homeowners looking to maximize their property’s potential. They not only provide financial relief but also cater to the dynamic needs of modern families. As California continues to evolve its stance on ADUs, the possibilities for homeowners are likely to expand further. 

While the journey to building an ADU can be intricate, the rewards – both financial and in terms of quality of life – can be well worth the effort. Whether you’re an existing homeowner or considering a new property, the potential of ADUs is an avenue worth exploring.