We love our ADUs and we get asked a lot of questions about them. Most people ask, “What’s an ADU?” or if they’ve heard about them, they have a lot of misconceptions about backyard homes. Here are the top 5 myths about ADUs and what you need to know.
#1: I Can Purchase an ADU at Home Depot for $25,000.
This is probably one of the most common myths about ADUs. We love The Home Depot and other big box stores and yes, they do have ADUs for sale that range from $12,000 to around $70,000. But let’s talk about what you’re getting: a steel pre-assembled framing kit. This means that you get steel panels for the walls, ceiling, and roof. That’s it. So what do you need to create a finished product? Doors, windows, cabinets, electrical, plumbing, a cement slab, permits, and maybe most importantly, someone who knows how to build it! Let’s call it what it is: a steel box. And did I mention that the price of delivery doesn’t even include unloading the products?
In reality, an ADU will cost $250,000 and up. I know, that’s a nice chunk of change to consider spending. But what does a full service ADU company include in that price? Just about everything! With ADU Warehouse, we’ll create a customized pricing proposal just for your project which includes the floorplan that you choose, site preparation, building foundation, crane (many times the premade pieces are so large that they are lifted up and over the existing home), shipping costs, site studies, permit applications, a kitchen, bathroom, flooring, electrical, plumbing, and everything else you need for a completed project. In addition, we work with other professionals like lenders, landscapers, real estate agents, and insurance brokers so that you get a 360 degree picture of your investment and how it will impact your financial future.
#2: I Can’t Afford an ADU.
Most myths about ADUs seem to circle around financing. Yes, ADUs aren’t cheap but they are a secure real estate investment. Here are some ways to pay for your ADU:
- Home Equity – In 2021 and 2022, many homes increased in value significantly which caused homeowners to quickly grow their equity in their homes. In fact, CoreLogic reported that in Q2 of 2022, the average homeowner had a record high of $300,000. That equity could be reinvested into purchasing your ADU.*
- Rental Income – Rental income has increased year over year and continues to rise. Now let’s play with the figures a bit. Let’s say you purchase an ADU that is $250,000 and put down 10%. You have a 30 year loan at 6.7% Your monthly payment would be $1,828.96. According to RentCafe, the average rent for a one bedroom apartment in Concord, CA in July 2022 was $2,269. Sounds pretty great, right?*
(*These numbers are just samples and may vary depending on your unique situation. Please contact your real estate agent, lender, and a financial advisor to determine your exact equity and payments.)
- Affordable Housing – Let’s talk about the cost of senior housing. Your parents may be Baby Boomers who need a little more help these days. Did you know that seniorhomes.com reported that senior independent living (which requires less care than assisted living and is much cheaper) costs an average of $2,814 per month in California and can go up to $6,825! Now consider selling your parents’ home and purchasing an ADU or putting that money set aside for senior housing towards paying off the ADU. They’ll have their independence but you’ll be just feet away to help take them to the doctors, go grocery shopping, or put together puzzles.
#3: An ADU is a Tiny Home.
Many people use the terms “ADU” and “tiny home” interchangeably, but this is yet another myth about ADUs and there are some distinct differences to be aware of. HGTV made tiny homes quite popular in recent years and it’s important to note that tiny homes usually are on wheels, portable, and tend to be smaller than ADUs. ADUs are permanent structures that live on a property with an existing home and tend to have the plumbing and electrical tied into the existing main lines. Tiny homes can be vans, trailers, shipping crates, etc. that have been adapted and modified to be a liveable space. ADUs are actual backyard homes with a cement slab, functioning kitchen and bathroom (though these spaces are smaller than traditional homes), and come as a studio, one-bedroom, or two-bedroom unit.
#4: There are too many regulations and restrictions for me to build an ADU in my area.
Over the past few years, the State of California has relaxed many of its regulations on ADUs due to the lack of affordable housing in our state debunking this myth about ADUs. The California Department of Housing and Community Development published the ADU Handbook which explains how, “New policies are making ADUs even more affordable to build, in part by limiting the development impact fees and relaxing zoning requirements. A 2019 study from the Terner Center on Housing Innovation noted that one unit of affordable housing in the Bay Area costs about $450,000. ADUs and JADUs can often be built at a fraction of that price and homeowners may use their existing lot to create additional housing, without being required to provide additional infrastructure.”
Now these relaxed policies aren’t set to last forever, so it’s important to create your plan now before this opportunity is overturned.
#5. It’s Hard to Find an ADU Company.
ADU Warehouse is happy to serve the Bay Area and Greater Sacramento Region! Our full service, turn key ADUs take the stress off of you and we take care of the details. From permits to landscaping to property values to estimated rental income, we’ll work with you every step of the way to help design, build, and complete your ADU.
I’m sure there are more myths about ADUs that you’re thinking about. Call us today for a no pressure informational call. We’re here to serve you!