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
