Your Guide to Building an ADU in Los Angeles

Posted by Ben Nicolas on Monday, February 17th, 2020 at 9:00am.

In 2019, California lawmakers passed legislation making it easier for people to build Additional Dwelling Units (ADU) on their property. While ADU's are an investment of your time and money, they’re more than worth the upfront cost and hassle. 

There are all kinds of benefits to building an ADU. For one, they allow you to keep your aging family members nearby while maintaining some privacy.  They also add instant resale value to your home and renting it out to tenants means thousands of dollars in extra income a month. 

Interested in building one on your property? Then check out this guide to building an ADU in Los Angeles to get a better idea of the process. 

The Basics

Before you jump into building an ADU on your property, you should understand clearly what an ADU is and whether or not building one is right for you and your family. While an ADU can add a lot of value to your home you should fully understand what you're getting into before building. 

What's an ADU?

Obviously, you have a pretty good idea of what an ADU is. It's right there in the name: additional dwelling unit. These "granny flats," as they're sometimes called, have all the amenities needed for someone to make the space their residence. That includes a sleeping area, bathroom, and kitchen. 

The types of ADU's you'll find generally fall into one of seven categories:

  1. Garage Conversion

  2. Home Conversion

  3. New Detached ADU

  4. Addition to Garage

  5. Addition to Home

  6. Addition Above Garage

  7. Attached to Garage

Another option is the Junior ADU (JADU). These units are no more than 500 square feet and exist within the walls of the primary dwelling structure. These units may also share central systems or a bathroom with the primary unit. The kitchen may also be very basic with only a sink and counter space that allows for small, plug-in appliances. 

Since California has relaxed their restrictions on ADU's this year, you're now allowed to build both a regular ADU and JADU on one property. 

Should You Build an ADU?

When answering that question for yourself, you first have to think about why you're considering building one in the first place. 

Are you hoping to create a space for your aging parents to move into in the not-so-distant future? If your only hold up is the money, then there are ways to mitigate the expenses. If you have some time before your family needs to move in, you could rent out the finished ADU for a year or two which could end covering all or most of the cost. Plus, if you ever plan to sell your house in the future, the ADU adds instant value, so you can rationalize the costs as an investment. 

Considering building an ADU solely to create another revenue stream by renting it out? In this case, the upfront costs will eventually pay for themselves, so the real consideration is whether it's worth your time and privacy. Being a landlord means collecting rent checks and being available in the middle of the night if there's an emergency maintenance issue that needs to be taken care of. That kind of work isn't for everyone!

One thing to keep in mind, though, is that with the new ADU rules, you no longer have to live at the primary residence to rent out the additional unit. In that case, you could rent out the primary and secondary homes, hire a building manager, and collect your profits without having to deal with the day-to-day stresses.

How Much Will it Cost? 

If you're ready to build an ADU, the next step is to think of the costs, which will depend on what kind of ADU you plan to build. Because of that, it's difficult to narrow down the price to a ballpark figure. You could end up spending $50,000 to convert a basement or $600,000 on a brand new structure. Generally speaking, though, it's likely to cost you between $250-$500 per square foot. 

You can't know exactly what your ADU will cost until you start talking to builders, but you can prepare yourself for the bills that will pop up along the way. Before you ever get to building, there will be design costs and permit costs. Then you have construction, fixtures and finishes, utilities, and perhaps interior design. 

If you price out your ADU and decide it's a little too steep, another option to consider is building a prefab ADU. Prefab units are built offsite and then brought and assembled on the property. Going this route means that your ADU will be move in ready in a fraction of the time. There's also a lot of financing options through the prefab companies themselves to help alleviate the upfront costs. 

The drawback to going prefab means you don't have many options when it comes to customization. You'll likely end up with something that looks a little cookie-cutter. So if you're an architectural design nerd or if you want the ADU to match the primary residence perfectly, a prefab unit might not be the right choice. 

Develop Construction Plans

The next step in the process is to put together construction plans. Without that, you can't acquire any permits. 

If you've decided to go with a prefab unit, you'll have to do your research to find a company that does great work and also has good financing options. Once you've made that decision, it will be a pretty simple process to get the plans together since there won't be a whole lot of designing and customization. 

For those who are building something the traditional way, you'll have to find a licensed architect. You'll work together to create a design that meets your needs and caters to your visions. This process can take around 1-2 months for you and your architect to get to a point where you're satisfied with the plans.

Permits

Unfortunately, just because you own the property, doesn't mean you can start building on it at your leisure. Luckily, though, the new relaxed ADU laws will help the process go along faster and more smoothly. 

The first step in obtaining permits is having your building plans reviewed by the city. If you're converting a one-story, already existing unit (like a garage) you might be able to get them reviewed at the Development Services Center within the hour. For more in-depth projects, it could take weeks for this office to look at and approve your plans. 

After the plan is evaluated, you might receive a list of corrections you have to make on your plan before it can move on to next steps. Then, you'll receive a clearance summary worksheet which will inform you of every other agency you will have to get the plan approved by before moving forward.

Once you've been cleared by every agency and paid the corresponding fees, you will be issued your permits and can get to work. This entire process can take anywhere from weeks to 6 months. 

Construction

The final step in the process is construction, which can take anywhere from 3 months to a year. Your contractors will give you a timetable for completion, but of course, issues pop up along the way, and often things can take longer than expected. 

To make sure things go as smoothly as possible, take time and care to choose the right contractor. They should be licensed and come highly recommended. Though affordability is one consideration when you're choosing a contractor, it shouldn't  be the most important one. Going with the cheapest contractor can end up costing you more in the long run when you have to pay to fix their mistakes or if they take way too long. 

 During construction, you'll have to schedule a preliminary inspection to make sure things are being built in accordance with the plans you had approved. When building is completed, you'll have a final inspection. 

Finally, You're Move-In Ready

When you pass your final inspection, you'll be given a Certificate of Occupancy from the city. It can take around 2-3 weeks for this document to be mailed to you. Once you've got it, you can have your in-laws move in or start looking for tenants to rent to! 

The process to build an ADU certainly takes some time, but with the new relaxed laws, it's much easier than it ever was before. 

Interested in building an ADU but don't have the room for it on your current property? Then contact me today at bnicolas@ietrealestate.com and we can start looking for a new home with great ADU potential. 

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