How much new ADU build increase value of the home in california
I'm currently constructing an ADU in Southern California. While I haven't remodeled the main house, it's situated in a highly desirable neighborhood. I'm interested in understanding the increase in value that the newly built ADU will bring to the current value of the property. will it be appraised for same cost per-sqt as like main house? Did anyone appraise the property / sold after adding adu?
Quote from @Dan Heuschele:
Quote from @Brian Koons:
Constructing an Accessory Dwelling Unit (ADU) in Southern California is a smart move, especially in a highly desirable neighborhood. ADUs can significantly enhance your property's value by adding living space that can be used for rental income or as additional living quarters for family members.
The increase in value from an ADU can vary widely depending on several factors such as the size, quality, and functionality of the ADU, as well as its integration with the main property. In most cases, ADUs do not appraise at the same cost per square foot as the main house. This is because the main house often includes value drivers that ADUs do not, such as larger living spaces and more comprehensive amenities. However, ADUs still add substantial value by increasing the overall utility and potential income generation of the property.
When it comes to appraisal, an appraiser will consider the added value of the ADU based on comparable properties in the area (comps) that have similar features, including ADUs if available. The income approach might also be used, evaluating the potential rental income the ADU could generate. This method is particularly relevant if you're in a market with high rental demand.
Many property owners have found that adding an ADU significantly increases their property's market value and appeal. While the added value may not directly correlate to the cost per square foot of the main house, the investment often pays off in terms of increased property value and rental income potential.
Let me know if you have any other questions! I work at an ADU company based in San Diego, and would love to help how I can>The income approach might also be used, evaluating the potential rental income the ADU could generate. This method is particularly relevant if you're in a market with high rental demand
I would like to know the appraiser who valued an ADU using income approach for a conventional loan. Please provide this.
Thanks
The income approach is generally utilized for 5+ units. City of san diego is mainly where i'm speaking of for ADUs. I am doing 8 ADUs on an SFR. However, I am doing a separate project where I am building 3 ADUs on an SFR, and there are DSCR options for those types of projects
@Dan Heuschele, I looked up the San Diego ADU bonus program. 15 years is not a long time to be deed restricted! The wild west indeed.
Also had a random thought how it’s interesting that these laws are getting passed by the state and they seem to magically get altered in the subsequent years in very significant ways. So who knows what the localities will and won’t be able to choose on their own later on.
Quote from @Robert C.:
@Dan Heuschele, I looked up the San Diego ADU bonus program. 15 years is not a long time to be deed restricted! The wild west indeed.
Also had a random thought how it’s interesting that these laws are getting passed by the state and they seem to magically get altered in the subsequent years in very significant ways. So who knows what the localities will and won’t be able to choose on their own later on.
The localities cannot be more restrictive than the state rules. In some far left localities you are seeing rules that are very much in excess (less restrictive - Wild West) of the state rules. San Diego was even going to opt in on SB10, but there was some organized backlašh so the city has not opted in (yet?).
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Quote from @Bruce Woodruff:
One thing rarely mentioned about ADUs is the general density and parking overload. Back when I was bidding/building and these became the rage, it was astounding to see municipalities in already crowded areas allow the density to (almost) double without taking any steps to provide additional parking or other amenities.
This may vary by area......
It's cultural actually LOL
back in early 2000 before all these ADU becomes a trend, some part of the city in San Jose is already congested becayse many houses are already having too many ADU, converted rooms, rent by room and so on and so on. These are typically 'non english-speaking' neighborhood so to speak for political correctness.
so parking while already become a problem, but adding ADU in that neighborhood would not become a problem because 'everyone knows each other' everyone has their own unit.
But that ADU thing, is bit uncommon in 'english-speaking neighborhood' LOL, so that's where "some" people is complaining about parking space and so on and so on when one home is building ADU.
For me, I prefer to have ADU on the hill side, now we have 15 car space and from one neighbor to next neighbor is like quite distant. I would say ADU is good to be built in the hill side, and/or where the neighborhood allows it and/or neighborhood with the large houses built in the 1920/1930s.
If one is building ADU in 2005 newer neighborhood 1.3 mil house hence comes the trouble LOL