Considering an ADU? Here’s What You Need to Know

Building an ADU is complex. From financing to permits, it’s a full-time job. Our ADU FAQs blog offers information for informed decisions before starting your project.

Are you looking to build an Accessory Dwelling Unit (ADU) in San Diego?

By: Fernanda C.

Are you looking to build an Accessory Dwelling Unit (ADU) in San Diego? This blog answers the most frequently asked questions regarding ADUs by homeowners. Read on so you can make informed decisions and take the necessary steps to make your plan to add an ADU as an investment to maximize your property and generate rental income a reality.

Multitaskr can help you with 100% ADU financing, architectural design, city permits, and zoning feasibility all the way to construction.

ADU General Questions

ADU Construction Questions

ADU Finance Questions

ADU Legal Questions

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General

1. What is an ADU, and how does it differ from a traditional home?

An Accessory Dwelling Unit (ADU) is a secondary living space that can be either attached or detached from the primary residence. They are usually used to provide housing to family members or guests and even for long-term or short-term rental purposes.

ADUs differ from traditional homes in several ways:

They are smaller in size ranging from 300 to 1200 sqft.
Have fewer or reduced amenities.
ADUs have to comply with different city building and zoning regulations.
All units must operate with Solar Energy.
They have other tax rules implications.
Require extra maintenance and management if used as rental units.

2. Can ADUs be used as rental units to generate extra income or just for guests and family members?

Depending on the homeowner’s preferences or goals, they can be used for both purposes.

Most of the time, ADUs are considered as an option to provide additional living space for family members or guests. Another popular option is to use ADUs as multi-purpose rooms, study rooms, or home offices. Although in recent times, many property owners have opted to use their Accessory Dwelling Units to create a second source of income by renting in a traditional way or as Airbnb units.

Whether an ADU can be used for long-term or short-term rental depends on your local zoning regulations, which can vary from area to area. Remember that some cities and communities may have specific rules regarding the usage of ADUs for rental purposes, such as limits on the number of renters or who can occupy the unit.

3. What are the maintenance and repair responsibilities of ADU owners?

Like any other property, owners of ADUs are responsible for ensuring that the unit is maintained and habitable for its occupants. Some of the most common maintenance and repairs needed include:

Structural maintenance
Electrical and plumbing systems maintenance
Heating, ventilation, and air conditioning (HVAC) systems
Exterior maintenance
Landscape and hardscape
Safety features
Solar Energy and storage batteries

Construction

4. Can anyone build an ADU on their property?

It all depends on city zoning laws, neighborhood restrictions, and building codes. These regulations can also vary according to the city or county, including:

Size limitations
Setbacks
Parking requirements
Limitations on rental purposes
Historical districts
Fire hazard zones
Geological zones

Another important thing to note is that some neighborhoods may have homeowner association (HOA) rules that prohibit ADUs, and regulate their design and usage. In these cases, property owners need to obtain approval from the HOA before proceeding with their project.

5. What are the zoning and building codes for ADUs?

Zoning codes typically regulate the size, location, and use of ADUs, including minimum lot size, maximum unit size, and restrictions on the use of ADUs for rental purposes. Some jurisdictions may also require a certain number of parking spaces to be provided on the property.

Building codes regulate the design and construction of ADUs, like requirements for electrical and plumbing systems, fire safety, accessibility, and energy efficiency. These codes also specify minimum standards for ventilation, insulation, soundproofing, windows, doors, and other fixtures.

6. How long does it take to build an ADU, and what is the permitting process like?

The time it takes to build an Accessory Dwelling Unit can vary depending on several factors. Still, on average, it can take anywhere from six to eight months to complete the construction of an ADU. However, some projects may take longer or shorter depending on the specific circumstances.

The permitting process can be divided into three main stages.

City intake: In this phase of the permitting process, it’s required to fill out the city portal application, hand over the necessary documents, upload paid invoices and do the city submittal.
City response: The city will send out its comments, and all changes must be applied to the project drawings before re-submitting them.
Approval process: Permits can be approved or rejected. If approved, construction of your ADU can proceed. If rejected, the cycle restarts.

Want to know about how we make ADUs simple for you at Multitaskr? Read this blog to find out our process! Continue Reading

Finance

7. How much does it cost to build an ADU, and what is the return on investment?

The cost of building an ADU (Accessory Dwelling Unit) can vary widely depending on several factors: the location, size, utility connection cost, special reports needed, such as soil, geological, and many others. Another factor to consider is the unit’s complexity and the cost of materials and labor in your area. On average, building an ADU can range from $50,000 to $300,000.

However, the exact cost will depend on several factors:

Size of the unit
Location
Utility connection costs
Zoning and city regulations
Materials and finishes
The complexity of the project

That is why we always recommend running a preliminary feasibility study report or PFA and a financial feasibility report or CFR to ensure the project’s viability before embarking on the process.

Now, let’s talk about the ROI or benefits of adding an ADU to your property. Adding an ADU can increase the value of your property, building up home equity and providing additional rental income, making it a smart investment for homeowners. The ROI for an ADU can range from 5% to 20% or more, depending on the local housing market and the specific circumstances of the property.

It’s important to note that the return on investment for an ADU can vary widely, and there are no guarantees. Before investing in an ADU, it is essential to research the local housing market, obtain professional advice and carefully consider the costs and benefits of the project. At Multitaskr we can help you run the zoning feasibility financial feasibility and provide you with an ROI report so you can have a clear path on what can be done, how much it can cost, and the projected return on investment as well as projected rental income that can be generated by adding an ADU to your property.

8. What are the options for financing an ADU construction project?

There are many options for financing an ADU, some of them are the following:

Personal savings or cash: This is the most straightforward and cost-effective option if you have the cash available, as it eliminates the need to pay interest on a loan.
Home equity loan or line of credit: A home equity loan or line of credit allows you to borrow against the equity in your home to finance the construction of an ADU. If you’re unsure if you have equity or how to access it to consider this option, you can talk to one of our ADU experts to find out more.
Unsecured loan: Often times, also known as construction or renovation loans, specifically designed to finance residential construction projects such as ADUs. These loans typically have higher interest rates than other types of loans and may require a larger down payment. Still, they can provide more flexible financing options for homeowners who need more equity on their properties or they, have a lower FICO score, or need to know their loan-to-value (LTV) and debt-to-income (DTI) ratios. If you’re interested in finding if you are eligible for this type of loan or want to find out your FICO, LTV, and DTI ratios, book a consultation with our ADU experts to go over this information provided on our CFR or Customized Financial Report.
Conventional mortgage: A traditional mortgage is a type of long-term loan, usually a 15-20-30 year term; this type of loan can also be used to finance the construction of an ADU. This option may be more suitable for property owners who plan to live in the ADU once it is completed.
Multitaskr financing: Multitaskr offers 100% ADU financing for your project through our BNPL (Build Now, Pay Later) Program that guarantees no out-of-pocket payments and guaranteed rental income from renting out your ADU in 18 months. Find out if you qualify for this option.

9. How do ADUs impact property taxes and homeowners insurance?

Adding an ADU can increase the property’s assessed value in many cases, which means higher property taxes. The amount can increase depending on size, location, value, tax rate, etc.

Adding an Accessory Dwelling Unit may also impact the insurance coverage of the property. It all goes down to the type of coverage chosen, size, and value of the ADU. Another thing you need to consider is that additional liability coverage may be required if the ADU was used for rental purposes.

Consult with your insurance provider and tax professionals to learn more about this.

Legal

10. Are there any legal considerations or limitations for ADU ownership and usage?

Property owners should know several legal considerations and limitations for ADU ownership and usage. Some of the key considerations include the following:

Zoning and building regulations
Rules for renting out the unit
Homeowner association (HOA) regulations
Environmental regulations (for example, septic sewage)

ADUs are becoming increasingly popular as a cost-effective solution for many homeowners across San Diego and California in general, so whether you are interested in generating extra income or maximizing your home space, ADUs are an excellent investment choice.

While the process might be complex and overwhelming, the many regulations and restrictions can be easily navigated with the help of our ADU experts.

Multitaskr’s doors are always open if you’re interested in discovering more about ADUs (or any other type of home improvements). Our Home Solutions Experts are always ready and available to guide you and provide clear and concise information upfront.

We hope this guide has provided you with a comprehensive understanding of Accessory Dwelling Units ( ADUs). If you have more questions not covered in this blog, feel free to get in touch.