“Accessory dwelling units,” also known as ADUs, is a small home built on the same land as a larger home. The popularity of ADUs has skyrocketed, up 1421% since 2016. Is an ADU right for you? In this article, a San Ramon Realtor will discuss the different types of ADUs, funding options, and their benefits.
Types of ADUs
ADUs are typically known by any of the following names:
- Granny flat
- Backyard cottage
- Carriage house
- Secondary unit
- In-law unit
ADUs are typically one of the following types:
- Internally attached. A basement is an example of an internally attached ADU because it is inside the home.
- Externally attached. A home addition is typically an externally attached ADU.
- Detached. These would include trailers in the backyard, a small guest house or other types of standalone units that are not attached to the main home.
Note: In addition to ADUs, there are Junior Accessory Dwelling Units (JADUs). These are units created from space within a single-family home. JADUs are small, less than 500 square feet in size, but come with a small kitchen and exterior door. In many instances, the JADU shares the bathroom of the single-family home.
ADU Advantages and Benefits according to San Ramon Realtor
Passive income. ADUs can be an excellent source of revenue from collected rents.
Space for extended families. ADUs can provide shelter for extended family along with the privacy everyone desires.
Affordable. In most places, ADUs can be more affordable because they don’t require additional payments for many key items, such as elevators, parking, new infrastructure, or land.
Increased living space. ADUs can rival the space seen in apartments and condos, making them ideal for families and individuals of all ages.
Better alternative for aging parents. This can be true for those who have aging parents: the average cost of a private room in a nursing home could cost more than the cost to build or maintain an ADU.
As people seek affordable housing, ADUs might be an excellent option for homeowners. While not all states support ADUs California has several financial incentives for ADUs:
California ADU Grant Program. This program provided up to $40,000 towards the pre-development and non-recurring closing costs associated with the construction of an ADU.
Note: On 3-1-23 all funds for the ADU Grant program were fully reserved. Check the site for information on upcoming grants and grant program information.
CalHome Program. This program provides first-time homebuyers with mortgage assistance, which includes the following for ADUs:
- Rehabilitation of ADUs or JADUs
- ADU/JADU assistance including construction
- Project loans and carrying costs during construction related to ADUs and JADUs
State funds are provided via nonprofit corporations or local public agencies.
Community Development Block Grant Program (CDBG). This program is designed for applicants qualified in low to moderate-income households for rehabilitation and areas for planning. Federal funds are allocated to non-entitlement jurisdictions that partner with Native American communities for community development activities. These would include potential local ADU rehabilitation and planning programs.
Local Early Action Planning (LEAP) Grants. This program provides state grants to local jurisdictions helping to develop or improve the ADU ordinance of the Government Code (HCD Lead program).
Accessory Dwelling Units | California Department of Housing and Community Development
SB2 Planning Grants. These grants to local governments are designed to stimulate the creation of ADUs and other building types. These are accomplished via the following:
- Pre-approved plans
- Fee waivers
- Website zoning clearing assistance
- Various homeowner or finance tools
Local Housing Trust Fund (LHTF) Program. This program provides matching funds to regional or local trust funds. In addition to ADUs, funds can be used for the following projects:
ADUs and JADUs are an excellent option for those feeling the effects of a challenging housing market. In addition to California, other states have ADU programs as well. For those looking for new housing options, an ADU or JADU may be exactly what they need.
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Why San Ramon CA?
San Ramon is known for its good economy, beautiful landscapes, and extremely popular housing market. When other states and territories have experienced a decline in housing prices the Bay Area, in general, has remained strong. This doesn’t mean you should not diversify your portfolio across many states, but San Ramon Realtors agree that this is certainly a strong place to start for a novice investor. There are even some great low-cost homes that are ripe for renovation.
We have a team of friendly, helpful San Ramon Realtors that specialize in East Bay CA real estate and property sales that can help you work out how to best get your property portfolio started. Our agents are here to put your needs first, get you the best deals and offers, help you buy or sell your dream home and build your investment portfolio. Reach out to our team today to find out your options.
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