Looking to buy or create an ADU (MIL) in Seattle

[Trevor Ramos]

I’m finally ready to tell the leap and buy a house, but because I live in an expensive Greater Seattle Area market, a mortgage on a quality home will consume a large chunk of my income. I’m looking for a creative house-hack to kickstart our real-estate journey.

My wife and I have a child in elementary school so we don't want to share our living quarters with strangers, and most multi-family properties here are either way over our budget or less quality of living than we'd prefer. With that being said, our compromise is to find a house with an ADU or mother-in-law apartment in the basement that can be rented to offset a large chunk of the mortgage.

We’re currently pre-approved and have been looking at properties that are matching our criteria. On some of the good properties they are already built in, these are less common but still out there. However, others are good houses that need to add the 2nd kitchen downstairs and a 2nd washer/dryer hookup somewhere else in the house so we can execute our strategy. When dealing with the latter we are looking for houses with basements with conforming room(s) and a separate entrance, with plumbing easily accessible to add the kitchen sink and extra spots on the electrical panel for more appliances.

My questions are related to the ‘adding the amenities to an existing basement’ houses.

1. I’m anticipating ~10-12k for the costs to add kitchen/laundry... Does that sound about right?

2. What permits do I need to have? ADU? Plumbing and electrical? Does the contractor I choose help me with that or do I do it on my own and bring it to them?

3. What kind of preliminary work can I do before I close on a property? I would like to get it built shortly after closing and move in/rent ASAP.

4. Anything else I’m not thinking of?

I would love to connect with people who have worked through the ADU process in the Seattle or King County area. Any information helps!

[Michael Haas]

@Trevor Ramos an extremely important thing to understand on the front end is the difference between a Mother-In-Law (MIL) and Accessory Dwelling Unit (ADU) in the eyes of the city of Seattle (as well as surrounding cities like Des Moines) . The plain and simple version in Seattle is that a MIL does not have a stove and cannot be rented separately from the main home unless the owner is occupying, and an ADU does have a stove and can be rented separately from the main home. Des Moines, and most other cities in WA, do not allow ADU's or MIL's to be rented separately from the main home, so if you're planning on househacking multiple times and turning the properties into full-on rentals after you move it may be better to be in Seattle, Tacoma, or another market that allows non-owner occupants to rent out both units.

The ADU / MIL distinction is important for your rehab costs too, as an ADU will require a full 8-12 week permit review, and require separate heat, a separate electrical panel, and a separate hot water heater. For a blank-canvas ADU conversion $50-$100k is a good budget. MIL conversions, on the other hand, can be done with only over-the-counter permits (issued the same day you send in your plans) and can be done significantly cheaper ($15-30k). The MIL will work fine if you plan to live in one of the units indefinitely, but may pose a problem if you move out and want to rent "both units" of the home.

Most of the properties on the MLS with existing basement units are either MIL's or completely un-permitted (akanot legal) dwelling units. A true, permitted ADU is extremely rare because they are expensive to build, the laws enabling them to be built more easily just took effect in 2019, and as both sides can be rented separately they can be held and rented as a duplex (often offering a great return) rather than sold.

As for question number 4 - I think there may be quite a lot that you aren't thinking about yet, but now, before you have a property under contract, is definitely the time to learn! There are a lot of potential hangups with ADU's and DADU's, so definitely make sure your agent is an expert in this area or find one who is!