I’ve realized that I’m not a person who likes to make big decisions and that change is really hard for me. Does that sound like you, too? Whether you love taking the plunge or you definitely look before you leap, education is the best way to have confidence in whatever lies ahead. If you’re going back and forth on whether to add an ADU (Accessory Dwelling Unit) to your backyard, here are some things to consider so that you can make the best decision moving forward. Here are 10 things to consider before you invest in an ADU:

  1. Backyard Feasibility – There are a few things to think about to determine if an ADU is even possible. For example, if you live on a sloping hill or under power lines, your backyard may not be able to support an ADU. A hill could cause problems for the foundation and may not be cost effective. Many ADU’s are prefab homes and come in parts that are hoisted up and over your existing home. If you live under power lines, then there may be no way to actually get the ADU into your back or side yard. 
  2. Cost – Okay, let’s jump to the reality of what an ADU really costs. Generally speaking, a 380 square foot studio unit could start at around $235,000. Don’t click away yet! An ADU can recoup your investment as a rental unit, home for grown kids, space for aging parents, or possibly a home office… or a variety of these uses depending on where you are in your life. If you have a business, your company could pay rent to you (discuss the legalities and details with your financial professional). Or maybe you want to rent it out for income until your children are grown or your parents need additional care. You may be able to use the equity in your existing home to help pay for this unit. Make an appointment with your lender to discuss what your options are.
  3. Usage – We talked about how an ADU can pay for itself, but really think about how you want to use it. If you plan to solely use it as a home office and you have a smaller sized backyard, a studio may be your best option. However, if you want a home office that will later transition into a home for your senior parents, a one or two bedroom floor plan may be more practical down the road. It’s better to think long term and about all of the potential possibilities rather than skimp now and live with regrets later.
  4. Budget – Cost and budget are two different things: an ADU basic unit may COST $235,000, but your wants and needs may require a BUDGET of $300,000 to accommodate that list. After you’ve talked to your lender, real estate specialist, or financial advisor you’ll have a better idea of what you have to spend and how to get the biggest bang for your buck. For instance, if you’re using your ADU as a rental unit, you may want to use the more budget friendly and sturdy luxury vinyl option rather than the pricey and more likely to be scratched hardwood products. However, if you live near the ocean or in extreme weather conditions, perhaps a more durable outside home siding that’s able to stand up better to the elements would be the best option for you. 
  5. Finishes – And speaking of flooring… There are a variety of options for you to consider when designing your ADU. I know, this is supposed to be about things to think about BEFORE you invest in an ADU, but this may influence which company you hire. Think about what’s included in the ADU process and what costs are extra. Much like a new build community, ADU companies have a set amount of options for you to choose from. Unlike walking into a big box store or warehouse design center, when building a prefab home, you’ll likely have three sets of materials to choose from in each category: siding, flooring, tiles, cabinetry, etc. It usually starts with choices that are included in the base price, a mid grade option and a higher priced option. Does the company you’re researching nickel and dime you or are you comfortable with their offerings?
  6. Floorplans – As you interview ADU companies, also review their floorplans closely. ADU companies have a unique business model; they tend to create four or five floor plans to mass produce and they also sell their product. This means that you’re limited to what they offer. It’s not like going to Lowe’s and comparing five types of refrigerators from 10 different brands. See if they offer the best model for your needs, budget and yard shape. If you have a large, skinny side yard, a skinny model may work best for you. If you need more of a square shaped model, you might have to look into another company.
  7. Company Reviews and Experience – As with most expensive projects, the right company makes all the difference. Check out the company’s Google and Yelp! reviews and ask to see pictures of past, finished projects. How many ADUs have they completed? How many years have they been in the industry? Trust your gut and do your research.
  8. Professional Partnerships – If a company has been in the business for a while, then they likely have partnerships they trust with landscapers, lenders, real estate specialists, and more. If they don’t, then this is a big red flag. It takes a team of contractors and more to build an ADU and they need to have a clear process to ensure that your project is done on time and on budget. 
  9. Timeline – How long will it take to build your ADU? With COVID-19 and the California housing shortage, many ADU companies have a waiting list or lengthy build timeline. When do you want your ADU to be completed and how long does it take from start to finish?
  10. Choose ADU Warehouse – ADU Warehouse is different from many ADU companies with the purpose of putting the customer first! You know how we said that ADU companies have limited floorplans? Not us! We are the only ADU company that we know of in California that represents many ADU producers to give you the best option. You’re not pressured to pick one from a certain brand! We also have partnerships with lenders, Realtors®, landscapers, insurance specialists and more to help you make the best decisions every step of the way. Want to learn more? Give us a call! We’re happy to answer any questions you may have.    

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