LICENSED ACCESSORY DWELLING UNIT (ADU) CONTRACTOR IN SAN JOSE, CA

ADUs are additional housing structures built on a property that already has a primary home or dwelling. These tiny homes come in many shapes and sizes and can be completely customizable. ADUs have many other names you may hear them referred to by, such as granny flats, guest houses, or in-law suites, but they all have the same type of structure and purpose. These homes have many benefits available for you to dive into and can be built on both a single-family lot and a multifamily lot. ADUs have their own entrance as well as other spaces such as kitchens, living areas, and bathrooms. In addition, ADUs can be wholly detached from housing and stand-alone or be attached, such as converting your garage. For a more detailed comparison of attached vs detached ADUs, please click here.

Tiny homes have become increasingly popular for many different reasons, whether you are looking for the perfect guest house or wanting passive rental income. Accessory dwelling units  are the ideal opportunity to add value to your home while also making a profit. ADUs can be used for a number of different reasons, which is why they have become so mainstream in recent years. 

ADU construction has never been easier since a new package of bills was passed in January of 2020. Now, in California, you can enjoy this luxury tiny home and all of its benefits because of this new series of bills. Some of these new laws include the ADU permits and how they are automatically approved for single-family homes and can be built on multifamily properties. 

These new laws that were put into place make building an ADU legal on a state level, invalidating any city ordinances. Not only do these laws permit the rebuilding of ADUs, but they also ease the process as a whole. ADUs can now be built in HOAs without any hassle, and cities must approve ADU applications within 60 days. Some of the other burdens lifted include the ADUs made by 2025 don't require the owner to live at the property, and ADUs can be developed at the same time as the primary unit. With these new laws in effect, it has never been easier to gain permits and build the perfect ADU for your needs. 

Let's face it. Real estate and monthly rent averages are pretty high when you're living in the Bay Area. The average real estate costs in the Bay Area are approximately $1.3 million, and rent can cost as much as $4,000 for a two to three-bedroom home. So, as a homeowner, one of the best investments you can make is in your home. 

With California's updated laws regarding ADUs, homeowners can gain instant equity by simply adding an ADU to their property. These units offer an affordable way to increase your cash flow. For example, with starting costs only ranging from $350 to $450 per square foot, ADUs can pay for themselves. Suppose we build an ADU rental home on your property that adds a monthly loan payment of $2,000 to your mortgage. In that case, your tenant's rent should be roughly $3,000, netting you $1,000 profit every month. Utilizing your ADU as an AirBnB is another excellent way to cash flow your ADU investment. 

Not to mention, these units add tremendous value to your home, meaning your home equity will drastically increase by building an ADU on your property. Your home equity is the difference between what your property is worth and how much you still owe on it. Here in the Bay Area, an ADU will add approxiamately 150% of the total costs in equity once the project is completed. For example- if we build a 750 sq ft ADU on your property at a build cost of $400/sq ft for a total of $300,000, you can expect that your property value will go up by approximately $450,000 upon the completion of the project. Talk about an instant ROI!

You can expect to pay between $350-$450/sq ft. for us to build an ADU in the Bay Area. Typically, the price per square foot will decrease as the ADU square footage increases, simply because there are a lot of fixed costs associated with building an ADU no matter what the size is. The larger your ADU, the larger your return on investment will be when it comes to property value and potential rental income. Keep in mind, we are a one stop shop and will be involved with the process every step of the way.

Not everyone will have the cash on hand to fund the development of an ADU. Fortunately, there are a lot of great lending options because banks realize how much an ADU will increase your property value, making it a low-risk investment for them. For a more detailed explanation of ADU financing options, click here.

With nursing home costs averaging around $11,000 a month for a private room, the Bay Area is an expensive place to need professional nursing care. However, you can avoid these costly expenses and add equity to your home with an ADU. Your ADU can function as an alternative to your elderly loved ones who need assisted living. 

ADU financing options typically average between $1,500 and $2,500 per month (primarily depending on the size of your ADU at approximately $350-$450/sq ft). Compared to the $11,000+ per month you'd be spending on a nursing home facility, you'll be saving a fortune while benefiting your family and your property at the same time. In addition, using an ADU as a nursing home alternative will afford you more time with your loved ones and a comfortable place for them to live surrounded by loved ones. 

ADUs make the perfect guest house as well. Whether you frequently have friends and family over to visit who need a place to stay during, or if you just want to have a place to spend a night or two out of your house once in a while, ADUs are perfect. In addition, even if you're using your ADU as a guest house, that doesn't mean you have to give up your cash flow opportunities. For example, you could use your guest house ADU as an AirBnB and rent it out to guests between your friend and family visits. The average AirBnB in San Jose costs around $250 to $300 a night. So, even if you only rent your ADU out as an AirBnB a few times a month, your loan payment is covered by your rental income alone. If you rent it out more often than that, then you're only adding to your cash flow from the ADU while giving your friends and family a beautiful place to stay whenever they come to visit you.