Leave a Message

Thank you for your message. We will be in touch with you shortly.

What is an Accessory Dwelling Unit (ADU)?

November 11, 2021

What is an Accessory Dwelling Unit (ADU)?
There’s a saying, “As California goes, so goes the nation!” When it comes to building Accessory Dwelling Units (ADU), that’s also true, with the Los Angeles area currently the most prolific in ADU construction. So what exactly is an ADU? An ADU is a secondary building on your property and the purpose for adding one varies. You may want to build an ADU if you are looking to add a:
 
  • Guest House
  • Pool House
  • Granny Flat (In-laws flat)
  • Long term rental property
  • Short term rental space like Airbnb
  • Home office
  • Home gym


From a Trickle to a Torrent

Until the last few years, the California Department of Housing & Community Development saw relatively few applications for permits to build an ADU. In 2012, only 158 of those applications were filed. By 2017, those numbers had multiplied more than 30 times, with 4,974 permits requested, and the latest figures available from 2019 show 14,702 permits were issued to build an ADU in California.

The ROI of an ADU

In the past few years, as the result of housing shortage in Los Angeles, State Bills 8 & 9, the newest California laws, allow homeowners to build an ADU on smaller lots as a way of combating the housing crisis. This gives homeowners the flexibility of adding an income stream as well as adding value to their property. 

Humble Ly, President/Founder of Dakota Benjamin, Inc. is a contractor Highland Premier has worked with in the past who builds ADUs across Southern California. 

“An ADU can be a great asset to California homeowners,” said Ly. “It can provide extra income which could be used to help pay for your mortgage,” he said.

Ly is currently working with the City of Los Angeles to fast-track standardized ADU plans. The low range to build an ADU is between $150,000 to $180,000. For a 1,200 square foot unit, the cost can be up to $250,000. 

Our advice would be to first allow us to perform a cost benefit analysis consisting of cost vs. usage. This is the best method to determine whether the juice is worth the squeeze, as they say. Which means, how much time will it take to earn back the money you invested in an ADU? Another factor to consider is whether the best use of your money is to renovate your home instead of building an ADU.

What Type of ADU Suits You?

There are three types of ADUs: detached, attached and a two-story conversion. The City of Los Angeles is working to provide pre-approved building plans for ADUs with over-the-counter pull permits which will be available very soon.
  • Detached: A completely separate building from the main home. The quickest and least expensive type of ADU to add to your property.
  • Attached: Exactly what it means: connected to the primary residence on the property as a way to expand the size of your main home.
  • Second Floor Conversion: The ADU is built on top of an existing structure, mainly an option for a single story detached garage. (This can often be the most expensive option.)

The Upside of Building an ADU

  • Property Value Increases potentially 15 – 20 percent!
  • Affordable Housing for renters priced out of the rental market.
  • Utilities are already in place to tie into electricity, gas, water and sewer.
  • Passive income: rent is extra income that can be used to pay off a mortgage.
  • Multiple Uses: ADUs can be repurposed as your needs change.
  • Incentives to Build: some cities provide incentives and loans to build ADUs.


Recent Blog Posts

Stay up to date on the latest real estate trends.

October 2024: Los Angeles Market Update

October 7, 2024

As we enter October, the autumn season brings some uncertainty to the real estate market. Despite continually declining interest rates this summer, the Los Angeles rea… Read more

September 2024: Los Angeles Market Update

September 9, 2024

September brings continually declining mortgage rates, which remain flat at its lowest rate in over a year at 6.35% for the 30-year fixed mortgage. However, the decrea… Read more

August 2024: Los Angeles Market Update

August 14, 2024

August brings positive news as mortgage rates have declined to its lowest rate in over a year, settling at 6.47% for a 30-year fixed mortgage, according to Freddie Mac… Read more

July 2024: Los Angeles Market Update

July 12, 2024

Over the 4th of July holiday weekend, Highland Premiere was busy prepping many new listings to be launched this week! We will have a total of four new listings for sal… Read more

June 2024: Los Angeles Market Update

June 17, 2024

As we enter the summer season, the mortgage rates continue to hover around 7% for the past 5 weeks, landing at 6.99% for the 30-year fixed mortgages this past week. Ma… Read more

May 2024: Los Angeles Market Update

June 5, 2024

As we get into the crux of the spring home buying season, interest rates have dropped after a 5-week climb, from 7.22% to 7.06% for 30-year fixed mortgages. As buyers … Read more

April 2024: Los Angeles Market Update

April 15, 2024

As we entered April, the current landscape of the real estate market has evidently shifted. There are two movements at play: the increase of inventory and the decrease… Read more

Optimism is in the Air

February 5, 2024

The outlook for the 2024 housing market can probably be characterized in one word: Optimism. We are starting to see a lot more optimism this year already, coming out o… Read more

New Year, New Beginnings

January 20, 2024

As we embrace 2024, it's a time for new beginnings, and the real estate landscape in Los Angeles and Orange County is no exception. We're thrilled to share that the ho… Read more

Let's Talk

You’ve got questions and we can’t wait to answer them.