It used to seem like ADUs were rare and that trying to get one constructed was an uphill battle. But, if you thought that those constraints would ensure that ADUs stayed a fad, we’d bet you’re wrong. The latest building code changes and the absolute explosion in ADU permits both indicate that ADUs are likely to continue to be popular for a long time.
Since California’s ADU regulations were loosened in 2017, there has been an explosion in ADU permits. Almost double as many permits have been issued for these units every year since 2017. In 2019, 12,300 permits were issued for ADU is in California alone. Official numbers for 2020 and 2021 have not been released. But those who work in construction, remodeling and real estate can tell you that more Californians are interested in building an ADU than ever before.
There has also been growth among professionals in the industry. Where previously you may have needed to rely on a general contractor to attempt an ADU, there are now ADU-specific contractors with years of experience building ADUs that you can trust to build these spaces properly and with the specific laws of your area in mind. Building an ADU is more like building a home than it is renovating a kitchen or bathroom.
Recent Changes in Building Codes
Speaking of ADU laws, they are all changing. To add fuel to the fire, Governor Newsom has signed Senate Bill 9, which allows homeowners to build up to two duplexes on a single-family lot. That means there can be up to four different family spaces in lot where there was once a single home. If you’ve lived in your home for three years and your lot meets certain size requirements, you can begin construction on more than one ADU, or other kinds of multi-family dwellings right away.
Newsom was also extended pre-existing protections which were designed to prevent overzealous local governments from preventing construction on single-family dwelling lots. He has extended the Housing Crisis Act of 2019 into 2030, limiting how much local government can charge for application fees and preventing them from limiting the number of units on a site.
Are ADUs a Good Investment?
You can build an ADU, or two, on your property, and many people will. But should you? Whether or not an ADU is a good investment for you will depend on many things. What is your property like, what is your rental market like, and what other investment opportunities are open to you?
In general, ADUs are a good investment for those who want to rent out part of their property. The average rental cost of an ADU is $2,000, although that can vary depending on your market. This could pay off an ADU which costs $150,000 in as little as six and a half years. From there, you’re gaining passive income on your property. How the math works out for you will be slightly different, of course, but ADUs are certainly worth looking into as investment properties.