What’s an ADU?

An Accessory Dwelling Unit, or ADU, is the legal term for a secondary independent home on a single-family lot, which adheres to new governmental rules allowing for an expedited permit process. Other common terms include granny flat, in-law house, backyard cottage, and second unit.

The State of California recently passed laws that ease permitting for ADUs, joining a growing list of other states to do so. This helps restore the power of families to add flexibility to their living environments, while giving cities additional housing density without greatly changing the character of the community.

How much does it cost?

In the SF Bay Area, detached backyard homes range from $120,000 to $500,000 depending on factors such as size, design complexity, fixtures and finishes, the amount of site preparation required, and city fees.

We’ve designed and engineered our homes to minimize unnecessary complexity and costs in materials and construction, while keeping high quality and livability at top of mind.

Can I afford my new ADU? What are my financing options?

You can get a jump start on understanding the financial details of building an ADU using our Cost & Cash Flow Calculator.

A Home Equity Line Of Credit (HELOC) is a common financing mechanism for homeowners with good credit and sufficient home equity. Often ADUs can be financed at an attractive interest rate with no cash down. Some housing advocacy organizations are also offering low-cost loans to help those with limited income, such as retirees. Everybody’s situation is different; we suggest speaking with your bank about your options. Additionally we can provide an introduction to one of our preferred lenders.

Can I rent out my ADU? How much rental income will I get?

Some homeowners opt to rent out their new homes to help pay for construction costs, generate income, and provide additional housing for the community. Market rental rates typically enable homeowners to cover the financing costs and then some.

You can get a sense of your local rental market by checking your local newspaper, or real estate websites, for rental listings containing the same number of bedrooms and bathrooms. We’d be happy to help with that.

What rental vacancy rate should I expect?

Vacancy rates depend on the local rental market and the state of the economy. An average range is between 5-8%.

More questions?

If you have outstanding questions, Contact Us. We are happy to walk you through the process!