TLDR: this is a faster, more flexible solution.
Recently, new legislation that makes it easier for homeowners to build Accessory Dwelling Units (ADUs) has come into effect in California. This legislation could not have come at a better time as ADU homes solve many issues, including reducing the housing crisis in California and giving homeowners the ability to turn their property into a multi-generational residence.
Expand Your Property So It Benefits Your Family and Your Finances
In your life, your circumstances change. Children grow up and may need a place to stay while they attend college or begin adulting. Dealing with sky-rocketing rental prices in California is enough to ensure they will never be able to purchase a home of their own.
Parents and grandparents may outgrow their homes and prefer to live with their adult children to feel safer. You may need to have live-in healthcare workers who care for ailing or disabled relatives.
Before, the best option you would expect for a feasible multi-generational living is a large home with ample space to cater to your needs. However, new legislation surrounding ADUs solves this issue. They enable you to build a separate dwelling on your property that allows you to give your adult children or elderly or ailing parents space of their own while still residing within the confines of your property. This negates the cost of purchasing both a larger property or another property as ADUs are far more cost-effective while helping you invest in your property in ways that will have long-term positive consequences.
Why You Should Consider Building An ADU Home
Besides legislation making it easier – and cheaper – to build an ADU, there are other reasons you should consider an Accessory Dwelling Unit.
Add a Personal Office Space
The pandemic has caused many homeowners to reevaluate the value their home provides. It also caused many companies to implement remote working on a full-time or part-time basis. This means that homeowners need more space – and privacy – to remain as productive as they would be in an office. Building an ADU is a permanent solution to a workforce that’s becoming more remote.
Create A Multi-Generational Residence
Whether you’re considering building a home as a transitional accommodation for adult children or as a home for elderly parents who still want their independence, an ADU home offers tremendous potential to turn your home into a multi-generational residence while giving everyone their independence and privacy.
Build Rental Accommodation
California is currently experiencing a housing crisis of epic proportions. Affordable rental homes are in demand and supply continues to diminish. An Accessory dwelling unit enables you to capitalize on this market, allowing you to take the first steps to become a landlord without having to invest a considerable amount in another property.
Younger and older tenants are also looking for alternatives to living in overcrowded high-rise buildings. ADUs happen to be the perfect alternative. Instead of having 100 neighbors, those who choose to look at in-law units for rent benefit from having a neighborhood closer to their workplace. In a sense, it offers the convenience and community of renting a home without the excessive cost.
If you’re living in the primary residence of the property there is also the potential to house-hack. House hacking essentially means the rental income from your detached ADU provides enough income to ensure you have very little to pay on your existing mortgage or essentially pays your mortgage in its entirety.
All Of The Above
Detached ADU’s are some of the most versatile structures. California law permits the structure to reach a maximum of 1200 square feet, which gives you enough space to be creative with design elements while providing enough area to comfortably build a two-bedroom unit. As your lifestyle and needs change, your purpose for using the property may differ. Therefore, creating an ADU that can be adapted is advantageous.
Additionally, when you’re building your ADU home, think about the resale value. If you develop a versatile structure that a future homeowner can use as an office, rental home, or a separate dwelling for family, your property will be far more valuable.
The Difference Between An Accessory Dwelling Unit and an In-Law Unit
If you’re considering turning your home into a multigenerational property, you may wonder whether you should build an in-law unit. In-law units have been a reliable way to extend property and care for older relatives in their senior years. These units also have separate entrances. In some instances, they may have a separate kitchen, bathroom, and living space and are often referred to as granny flats or in-law apartments. However, with the resurgence of ADU homes, homeowners are confused about the differences – if any – and if one offers more material benefit.
What Is An In-Law Unit?
An in-law unit has many of the same characteristics as an ADU. Most people use the words interchangeably. In-fact, an in-law unit is a colloquial term for an ADU. The term in-law unit or in-law apartment refers to a supplementary residence on the same property with a separate entrance and separate amenities to the main home.
However, for more families – and many contractors – an in-law unit has distinct features that classify it as an in-law unit.
That distinction does not have to be about the unit’s plan. In-law suites often prioritize safety and accessibility for aging relatives. Most designs include everything on one floor with minimal elevation or distinct separation between living spaces. But so can be an ADU – safe, accessible and one story.
Typically, in-law units have less square footage. They usually only have one bedroom, a small kitchen, and a living room. They are typically attached to the home. These homes do provide resale value to a home. However, they are less likely to provide rental income for families as they are usually too close to the main family space.
In-Law Unit vs ADU
In comparison to an in-law apartment, an ADU home has flexibility. The unit is often built as an entirely separate home, with a facade and design that makes it feel independent of the main property. This ensures that the unit offers value to current and future homeowners, regardless of its purpose. ADUs can also have up to 1,200 square feet of space and reach up to 16 feet high, which means they can resemble townhomes, giving them room for elevation. In most cases, an ADU has at least six feet of separation between it and the main home, giving the occupants greater privacy.
What Legislation Says About In-Law Units and ADUs
When you’re seeking permission to build an in-law unit or accessory dwelling unit, you’re going to encounter legislation. This legislation doesn’t give any material separation between an in-law unit or an ADU.
In California, the biggest difference between the two is usually whether or not the property will be attached. Attached units will need to meet specific criteria to be approved, likewise with detached properties.
Additionally, an in-law unit can also be a JADU (Junior Accessory Dwelling Unit), which is a type of dwelling that falls within the walls of the home and is smaller than 500 square feet. The unit will also have limited kitchen facilities and only make provisions for small appliances.
Is It Better To Invest in An ADU or In-Law Apartment?
The answer to this question will depend on your circumstances and your budget. As a general rule, ADUs offer better resale and investment value. Since they can be larger, they can attract a variety of rental applicants and generally receive a higher rental income. In-law units, if converted from existing living space, are a cost-effective way to build a separate dwelling on your property. They also remove the need to spend extra for an elderly parent to reside in nursing homes or retirement communities.
How Easy Is It To Build An ADU?
In January 2021, further legislation came into effect that made building an ADU an easier and faster process; and something most homeowners in the state should consider. California’s legislature encourages homeowners to build these units to combat an on-going housing crisis and sky-rocketing rentals. Therefore, they’ve made some changes that will not only benefit multi-generational families but homeowners in general.
Shorter Approval Process
Before the approval process could take up to four months to be finalized, that’s changed. Now, if your local agency has not acted on your permit application in 60 days, your application will be deemed approved.
No Limitation To Size and Occupancy
While multi-generational homes benefit many families, when adult children or elderly relatives outgrow the space, it could become difficult to find tenants because of previous legislation that made the process extremely prohibitive. Most of the red tape surrounded who could reside in an ADU and how large it could be. For many homeowners who wanted to build an ADU, this meant smaller units with limited square footage.
Now ADUs can reach 1200 square feet and can no longer be rejected based on minimum lot size. If you have a 2000 sf barn on your property, you can turn it into an ADU too.
Limited Parking Restrictions
Gone are the days when your ADU would be prohibited based on parking requirements. If your home is within half a mile of public transport you do not need to replace off-street parking. This enables you to turn a garage or a covered carport into an ADU so long as it meets minimum health and safety standards.
Another previously prohibitive part of the ADU rules was the need for owner-occupancy; the rules meant many property investors could not build ADUs because they did not reside in either the primary residence or the ADU.
However, the new legislature ensures local agencies cannot enforce such restrictions.
Therefore, if you’re thinking of investing in property in California this is possibly the best news regarding ADUs.
Now the primary residence does not need to be occupied by the owner, and neither do the ADUs. This allows investors to purchase a home and build an ADU on the property and rent both the main home and the ADU.
Many of the benefits of building an ADU will positively impact your family, finances, and community. From an investor’s point of view, these units are more affordable to build than buying even the tiniest of apartments and are a more accessible way to enter the rental market while helping lower and middle-income tenants find suitable units to rent.
In the face of an on-going pandemic and the long-term repercussions of such an event, having an ADU also allows you to safeguard your family, elderly and vulnerable relatives in an environment that is most comfortable for you.
If you are still wondering whether you should build an ADU, now is the best time to commit to building one. Legislation has just come into effect that favors homeowners who build, and the sooner you build, the sooner you can start reaping the benefits of having a separate unit on your property.