Author Topic: ADU's  (Read 592 times)

Jon Bon

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ADU's
« on: September 23, 2020, 08:08:05 AM »
So I think the consensus is that everything is expensive right now. Houses, stocks, yachts, etc etc. So I am looking for good investments. I have a rental property that I think would benefit from an ADU. It is in a great location and I get a nice return off a very old beat up house.  So my thinking was a compact ADU at the back of the property would get similarly good returns. I reached out to my building department for more information.

The Numbers:
Current rent:$1000 for an old beat up 2bed 1 bath
ADU Rent: $1200-1500 for a 2 and 2
ADU building cost: $75,000-$100,000

In theory I should be willing to spend 150k on an ADU to hit the 1% rule.

I have done a fair amount of building so I would GC this myself. Any thoughts and or experience would be appreciated.





 

bacchi

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Re: ADU's
« Reply #1 on: September 23, 2020, 09:54:35 AM »
The most rentable ADUs are on corner properties or those with an alley. If that's not possible, build a separate driveway. A fence between the front and back unit is helpful too.

I'm sure you're aware but lumber is hella expensive right now. The trades are also charging a lot more for labor.

Jon Bon

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Re: ADU's
« Reply #2 on: September 23, 2020, 10:10:16 AM »
The most rentable ADUs are on corner properties or those with an alley. If that's not possible, build a separate driveway. A fence between the front and back unit is helpful too.

I'm sure you're aware but lumber is hella expensive right now. The trades are also charging a lot more for labor.

Yeah I have a back alley, but currently everyone parks behind the house. So im not sure exactly how I would handle it.

Lumber, tell me about it!

A 2x4 is over $6 these days, and that shit literally grows on trees!


fishnfool

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Re: ADU's
« Reply #3 on: September 23, 2020, 10:58:52 AM »
We bought a rental property with a ADU 17 years ago and it has paid off well. Especially now that I just retired the beginning of this month, we sold our primary home and moved into the rentals main unit. We are making enough off the ADU to cover property taxes, homeowners insurance, utilities and more!

If you plan to own this property for a long time, it would be a worthwhile investment, including raising the resale value!

The permit process is sometimes a pain to go through. For instance, if the house is older, will you be required to have fire sprinklers and will they make you install them in the whole house? Things like that come up depending on your county requirements.

Being your own GC is a huge plus and will save you a lot of money if you have time to do some of the work.

Good luck! 
« Last Edit: September 23, 2020, 11:01:02 AM by fishnfool »

sammybiker

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Re: ADU's
« Reply #4 on: September 24, 2020, 08:13:18 AM »
@Jon Bon  PLEASE PLEASE PLEASE start a thread if you GC this baby.  Would love to follow along as I want to do something similar in the near future.

spartana

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Re: ADU's
« Reply #5 on: September 24, 2020, 03:43:43 PM »
OP I'm not sure what state you're in but be aware that some states (Calif for instance) requires the property owner to live on the property in either the main house or ADU. So if you planned to rent both spaces that might not (legally) be allowed. The ADU laws in my city and state are constantly morphing and being revamped so that may be the same for you. For example we are allowed larger ADUs as of this Jan and they can now be two story, more SF and closer to lot lines. Parking is regulated too and you must provide one parking space on a driveway for each ADU dwelling unless the ADU is within 50 yards from public transit. Sprinklers, alarm systems, open space requirements, etc are constantly changing and may impact the size and useability of an ADU.

But yes they are money makers. The one built on my former house (along with the giant new 2 story house which the owners live in and also rent out 5 or 6 bedroom for approx $1000 - $1200 each) is a 2 bedroom/2 bath 800 sf 2 story (can now build to 1200 sf) is rented for $2500/month.
« Last Edit: September 24, 2020, 03:46:40 PM by spartana »

joenorm

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Re: ADU's
« Reply #6 on: September 26, 2020, 09:08:58 AM »
I just built a house myself in a HCOL area and everyone warned me of high materials costs. I found that sure, they're more than they used to be(of course) but the real expense was other contractors labor.

The more labor you can put in the better. With the rates others charge(a plumber is $120 per hour here for example) all of the sudden your hourly while you work the project becomes pretty high.


Jon Bon

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Re: ADU's
« Reply #7 on: September 27, 2020, 08:04:29 AM »
I just built a house myself in a HCOL area and everyone warned me of high materials costs. I found that sure, they're more than they used to be(of course) but the real expense was other contractors labor.

The more labor you can put in the better. With the rates others charge(a plumber is $120 per hour here for example) all of the sudden your hourly while you work the project becomes pretty high.

Roger Wilco

I have the same experience. Lumber costing 4k to 5k is not a huge cost over all. Luckily I can DIY everything if I choose but would hire out just for speed.

Currently we are thinking of moving for more space, or I will build the ADU so I can have a dedicated workshop underneath it.