ADUs in California

ADU Rebecca Rook May 23, 2024

My goal this last week was to visit homes that had already built an ADU on their lot. For those of you that don't know what these are, it's a small home designed to sit on the lot of a residence. It's affordable housing to construct because they don't require major infrastructure. ADUs are built with cost-effective wood frame construction and provide just as much living space as a small condo. They are required to have their own entrance, and the bathroom must measure 30 sq ft with toilet, sink and shower. The kitchen must measure at least 50 sq ft. and the bedroom must be at least 70 sq ft. Parking needs to be available unless residents live within 1/2 mile to public transit. There are a ton more rules in place that can be looked up or sought out through a verified architect to ensure compliance as these are ever changing year after year. Check with your city to find more specifics. 

My research into ADUs is to find out how it can lower the regular monthly mortgage for first time home buyers by using the potential rental income. My visit was to 2315 Bess Ave in Livermore this past Thursday's Broker's Tour and this home is listed at 2.8m. This home has not only one but two ADUs in the back yard and the home sits on .52 acres. The ADUs are each placed on the side of the yard adjacent from each other with a wide open space for play. Both were air conditioned, and included washer/dryer/refrigerator, kitchen, bath and bedroom. Definitely spacious enough for one person or a couple! With average one bedroom rentals in the Tri-Valley area around $1000, my guess is that these ADUs could bring in $1500-$2500 a month. If the buyer for this home were to purchase for $2.8m (30-yr fixed)with a 20% down payment of $560k, they're estimated monthly per would come in close to $18,563, including principle, interest, tax and insurance with an interest rate of 7.029%.  The main house has 4 bedrooms and 3 bathrooms with 2700 sq ft. Your family lives there while you rent to college students, a single mom, whoever! You now are only paying around 14k a month for your mortgage with a built in investment for years to come unless you decide to sell them which is now legal to do in the state of California!

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