7 Steps to Finding the Perfect Builder For Your ADU Project

Embarking on an Accessory Dwelling Unit (ADU) project is an exciting endeavor for homeowners like you, unlocking increased living space, rental income potential, and even multigenerational living possibilities. However, finding the right builder can make all the difference between a smooth process and a stressful one. With numerous builders available, each offering their unique expertise and approach, it's essential to navigate the selection process thoughtfully. In this guide, we'll walk you through the steps to help you find the perfect builder for your ADU project.

Step 1: Get Your ADU Design

Before venturing into builder searches, take time to solidify your ADU vision and develop the design for the project. The more design information you can provide the builders, the more accurate their cost estimate can be, and they can better discuss how they would execute the project. Including your ADU architect or ADU designer in the selection process can also be a great strategy, as they can help ask important questions and give you advice on the best fit for your project.

You can also start by selecting a pre-designed ADU design so you are beginning your contractor search with the knowledge that the ADU has been built before and you already can have a rough idea of costs before starting conversations with builders.

Step 2: Define Your Project Needs and Goals

Before diving into the search for a builder, take the time to define your project needs and goals. Consider factors such as the size of the ADU, your budget, desired timeline, and any specific features or design preferences you have in mind. Having a clear understanding of what you want to achieve with your ADU will help you communicate effectively with potential builders and ensure they can meet your expectations.

Step 3: Research Builders in Your Area

Once you've defined your project needs, start researching builders in your area who specialize in ADU construction. Look for builders with experience and a proven track record of delivering high-quality ADUs that align with your vision. You can start by asking for recommendations from your designer, friends, family, or colleagues who have recently completed ADU projects. Additionally, explore online resources such as builder directories, review websites, and social media platforms to gather a list of potential candidates.

Ideally, you should develop a list of 5-10 companies in your area that you are potentially interested in working with. This “long list” will be the businesses you will research in more depth before reaching out to them.

Step 4: Review Portfolios and References

After compiling a list of potential builders, take the time to review their portfolios and gather references from past clients. Look for builders who have experience working on projects similar to yours and have a portfolio that showcases their craftsmanship and attention to detail. If they have projects that align with your aesthetic taste, that is a bonus. Reach out to past clients to inquire about their experience working with the builder, including communication, project management, and overall satisfaction with the finished ADU. It is good to ask about how they dealt with any challenges or hurdles that come up in the process. No project is smooth from start to finish so knowing how people deal with conflict resolution is key to having a great working relationship.

Step 5: Schedule Initial Consultations

Once you've narrowed down your list of potential builders to 2-4 ideal companies, schedule initial consultations to discuss your project in more detail. Use this opportunity to ask questions about the builder's experience, approach to ADU construction, project timeline, and pricing structure. Pay attention to how the builder communicates and whether they listen to your needs and preferences. Building a strong rapport with your builder is essential for a successful collaboration, so trust your instincts during the consultation process.

We typically recommend interviewing the builders and ideally meeting on site if they are available and willing. Also, having a series of questions that you ask all the builders you interview can help you compare their responses to find the best fit.

Step 6: Request Detailed Proposals

After meeting with potential builders, request detailed proposals outlining the scope of work, project timeline, materials and finishes, and pricing. Review each proposal carefully and compare them side by side to ensure they align with your project needs and budget. Pay attention to any discrepancies or areas where clarity is needed, and don't hesitate to ask questions or request revisions as needed. A transparent and detailed proposal will help you make an informed decision when selecting a builder for your ADU project.

This is another place that your design team can be a huge help. Architects and designers can help compare bids, clarify areas that may be confusing, answer your questions, and look for opportunities to potentially save costs. It is highly recommended that you engage your designers to benefit from their expert advice during this process.

Step 7: Check Licensing, Insurance, and Credentials

Before making a final decision, take the time to verify that your chosen builder holds the necessary licensing, insurance, and credentials to perform ADU construction in your area. Check with your state or local licensing board to ensure the builder is properly licensed and in good standing. Additionally, verify that the builder carries adequate liability insurance and workers' compensation coverage to protect you and your property throughout the construction process. Finally, consider any additional certifications or affiliations that may indicate the builder's commitment to quality and professionalism.

Conclusion

Finding the perfect builder for your ADU project requires careful research, thoughtful consideration, and clear communication. By following these seven steps, you can ensure you find a builder who can bring your ADU vision to life. Remember to trust your instincts, ask for advice from your design team, ask lots of questions, and prioritize transparency and professionalism throughout the process. With the right builder by your side, your ADU project will be off to a successful start.

Legalizing ADU Sales in California: A Game Changer for Affordable Housing and Real Estate Investment

In a progressive move toward addressing the pressing issues of housing affordability and expanding homeownership opportunities, California has recently enacted Assembly Bill 1033 (AB-1033). This landmark legislation legalizes the sale of Accessory Dwelling Units (ADUs) constructed on a property, a concept already familiar in cities like Seattle and Portland. This development is a win-win for housing advocates, homeowners, and those aspiring to enter the housing market while simultaneously enhancing the investment potential of ADUs.

Unlocking New Possibilities: The Power of Legal ADU Sales

The legalization of ADU sales under AB-1033 signifies a significant step toward redefining homeownership dynamics and creating a more accessible path to building equity. This new legislation is particularly beneficial for those looking to break into the housing market, as it offers an innovative approach to property ownership. By allowing the separate sale of the main house and the ADU, homeowners gain an unparalleled level of flexibility.

Investing in ADUs: A Promising Proposition

The introduction of AB-1033 has also amplified the appeal of ADUs as a sound investment. Recent reports from the Seattle area offer a glimpse into the remarkable financial prospects associated with ADU sales. Sales prices for these units have exhibited a remarkable range, from $399,000 for a 493-square-foot attached ADU to a staggering $825,000 for a 1,010-square-foot detached ADU. These figures raise eyebrows, and for good reason.

In comparison to the typical construction costs, which generally fall within the range of $200,000 to $300,000 for a detached ADU, the resale prices translate into an exceptionally high return on investment. Consider this: if you leverage the equity in your home to build an ADU for $300,000 and, after a year of design, permitting, and construction, you are able to sell the unit for $600,000, you are reaping a 100% return on your investment in just 12 months. This presents an outstanding opportunity to generate wealth and make the most of your property.

Affordable Housing at Its Core

While the sale prices of ADUs may appear substantial when viewed in isolation, it's essential to assess them within the broader context of the housing market. In regions like Seattle, where median home prices for single-family homes surpass the $800,000 mark, ADUs represent a relatively affordable entry point for prospective homeowners. This trend, offering a more cost-effective means of securing property, is expected to ripple throughout California and other housing markets.

The Road Ahead

The introduction of AB-1033 and the increasing popularity of ADU sales underscore a compelling shift in the real estate landscape. As traditional housing becomes increasingly unaffordable for many, ADUs emerge as a pivotal solution to foster more inclusive homeownership. By creating an environment where starter homes are not only accessible but also financially viable, the housing market can become more attainable for a broader spectrum of families.

In summary, the legalization of ADU sales is more than just a change in legislation; it's a transformative force for affordable housing, real estate investment, and wealth creation. The ADU market, previously overlooked, is now emerging as a dynamic arena that not only provides new opportunities for homeowners but also addresses the growing need for housing affordability in an ever-evolving real estate landscape.

Detached ADUs can now be sold as a separate unit in cities throughout California. This is a game changer for ADUs as an investment and as a way to address housing affordability.

Myth Busting the Owner-Builder Approach for ADU Projects

When considering an Accessory Dwelling Unit (ADU) project, one of the critical decisions you'll face is whether to take the path of an owner-build or entrust the project to experienced professionals. While owner-building might seem like a cost-saving venture at first glance, this article aims to shed light on the fact that the often-illusory savings in dollars come at the substantial cost of time, stress, and potential pitfalls. As an advocate for well-executed ADU projects, I'll discuss the pros and cons of owner-building, ultimately making a compelling case for the investment in hiring experts to guide your ADU journey.

The Pros of Owner-Building an ADU:

• Perceived Cost Savings: The primary allure of owner-building is the perception of cost savings. Some homeowners believe that by cutting out the professionals and managing the project themselves, they can reduce overall expenses. We have heard people say they saved 20% of the total construction cost, or even thrown out numbers like $100,000 in savings.

The Cons of Owner-Building:

• Hidden Costs and Errors: Unfortunately, the reality of owner-building often diverges from the dream. Inexperience can lead to costly errors, mismanagement, and rework. Poorly executed projects can end up costing more in the long run when considering lifecycle costs. A slower scheduled impacts your ability to generate revenue if the ADU will be a rental unit. Missing regulatory requirements can cost a lot of money in redoing work or addressing potential future fines.

• Time-Consuming: ADU projects are complex, requiring extensive time and effort for planning, permitting, subcontractor coordination, and construction. Owner-building often results in significant time commitments that can disrupt your daily life and add stress. If you have a full time job, your time is much better spent earning money with your expertise and hiring an experienced builder to lead your ADU project. Trust me, as I get older I understand that nothing is as valuable as my time and anything I can do to invest in time savings is worth it so I can spent more of my personal time with family and friends, doing the things I love.

• Regulatory Challenges: Navigating local regulations, zoning codes, and building permits can be daunting without professional guidance. Mistakes in this area can lead to project delays and potential fines. They also could lead to legal issues in the future if you don’t meet code requirements. This can add a big risk to your investment.

• Risk: When you build the project yourself you are liable for all mistakes and potential outcomes. If someone gets injured because something isn’t to code or a safety requirement isn’t met on the job site you can be sued. If you order materials and the wrong ones are delivered or they are defective, you can be on the hook for that sunk cost. You don’t have insurance or other financial protections like a general contractor does so you are taking on significant financial risk.

Why You Should Hire Experts:

1. Expertise and Efficiency: Experienced ADU designers and general contractors bring a wealth of knowledge and expertise to ADU projects. They can streamline the process, ensuring that everything is done correctly and efficiently from the start, saving both time and money in the long run. Even though ADUs are small and seem simple, an experienced team is well worth the investment.

2. Customization: Professionals work with you to create a design that suits your unique needs and preferences. They understand local regulations and can design an ADU that complies with zoning requirements while maximizing its potential. They can give you advise on ideal layouts, quality materials and systems, and actually save you money by considering things like sustainable features, lifecycle costs, and passive energy saving strategies.

3. Quality Assurance: With experienced professionals, you can expect a high standard of workmanship, reducing the risk of costly mistakes and rework. This not only saves money but ensures a durable and aesthetically pleasing ADU. Contractors are liable for their work and carry insurance policies to protect them and you from costly mistakes and legal situations.

4. Time Savings: ADU projects can be time-consuming and stressful, especially when managed by an inexperienced owner-builder. Professionals handle the details, timelines, and coordination, allowing you to focus on your daily life without undue disruption. They also have relationships with subcontractors, material suppliers, and others to get your ADU project completed in fewer months. This means you can start renting your ADU quicker and start generating income. Remember, every month of delay can cost you thousands of dollars in lost rent.

5. Compliance and Permits: Experienced architects and contractors understand the regulatory landscape, ensuring your project is compliant with local codes and obtains the necessary permits. This eliminates the risk of project delays and costly legal issues.

Conclusion:

In the realm of ADU projects, owner-building might appear to be a cost-saving strategy. However, the hidden costs in terms of time, errors, and stress often outweigh any potential financial savings and often lead to projects that end up costing the same or more. Investing in the expertise of experienced designers and general contractors is the wise path for all ADU projects. Their knowledge, efficiency, and commitment to quality not only save you money in the long run but also ensure your ADU is a valuable and functional addition to your property. Don't let the allure of immediate savings cloud your judgment; opt for the experts, and your ADU project will thank you for it.

Your ADU is an investment and taking shortcuts or trying to save a dollar at the expense of quality is never recommended.

If you were considering doing an Owner-Build ADU project and have questions, don’t hesitate to reach out and tell us about your project.

What Should Design Fees Be For A Custom Designed ADU?

There is a lot of misinformation out there regarding what is an appropriate design cost for ADU Projects. Hopefully this post will help cover some aspects of this debate so you can better budget for your project.

When embarking on an Accessory Dwelling Unit (ADU) project, one of the critical decisions you'll face is determining the appropriate design fees for professionals to help you with your project. As an experienced ADU designer, I've had the privilege of working on numerous ADU projects across the country, and I firmly believe that investing in professional design services is the cornerstone of a successful outcome.

In this article, I'll provide a comprehensive perspective on design fees, focusing on why allocating 10-15% of your project budget to these services is not only reasonable but often a prudent investment in your ADU project.

If you read forums or facebook posts asking about ADU design fees and people are saying that $10,000 or more is expensive be very skeptical. If you are paying below $10,000 for designer services I would be very nervous about the quality of work you are getting or the experience level of the designer. Yes, there are designers out there willing to work for cheap prices, but you will also be getting cheap service. Remember, you get what you pay for.

1. The Value of Professional Expertise:

Architects and experienced ADU designers bring a wealth of expertise to ADU projects. From understanding local building codes and regulations to creating sustainable, efficient and aesthetically pleasing designs, our knowledge is invaluable.

ADUs require careful planning to maximize space, ensure structural integrity, and meet safety standards. By allocating an appropriate percentage of your budget to design fees, you're not just paying for drawings; you're investing in the peace of mind that comes with knowing your project is in capable hands. You are making an investment. And like other investments it will pay off in the long run.

2. Tailored Solutions for Your Needs:

Quality designers don’t provide one-size-fits-all solutions. Instead, we build expertise in particular project types over years of studying, and practicing. We then work closely with you to understand your unique needs, preferences, and vision for your ADU, and draw on our experience to deliver a high quality design.

The design process is a collaborative effort, where your input is integrated into every decision, ensuring that the final product aligns with your goals and the specifics of your property. The level of customization and attention to detail that an architect or experienced designer can provide justifies the fees associated with their services.

3. Navigating Regulatory Challenges:

Local regulations, zoning requirements, climate variables, site conditions, and building codes can be complex and vary significantly from one property to another. Experienced designers are well-equipped to navigate this maze.

By working with a professional, you reduce the risk of costly mistakes, delays, or design revisions that may result from non-compliance. This ensures your project proceeds more smoothly, saving both time and money in the long run. And even when a designer runs up against regulatory hurdles, they know how to research codes, talk with staff at the building department, and negotiate their way through the approval process.

4. Maximizing Your Investment:

A well-designed ADU can significantly increase your property's value. By allocating 10-15% of your project budget to design fees, you're not just paying for the design itself; you're investing in a more valuable asset.

A thoughtfully designed ADU will attract tenants more easily, potentially increasing rental income and reducing vacancy time.

For homeowners, the value of your property will rise, ensuring that your investment pays off. The initial investment in design may sound like a lot, but it’s actually a very small part of the overall project budget, and even smaller part of the lifecycle cost of your project. For most ADUs, the design fees will be offset with only 6-12 months of rental income. This doesn’t even take into account the increase in your property value.

Considering ADUs can last decades, design is a tiny investment to make in a long term appreciating asset that can cashflow on a monthly basis.

5. Long-Term Savings:

Professional designers don’t just think about the immediate construction phase but also about the long-term sustainability of your ADU.

They can incorporate energy-efficient design elements that lead to lower utility bills and reduced maintenance costs. This can translate into significant savings over the years, offsetting the initial design fees and contributing to the overall financial viability of your ADU project.

Often these lifecycle savings can be multiples larger than the initial design fees. Wouldn’t you spend $25,000 to hire an experienced designer now to save $3,000 to $4,000 in maintenance and utility costs per year over 20 years? Design fees can easily cover themselves when taking a long term view of your ADU project.

6. What is an Appropriate Design Fee:

We have referenced 10-15% a few times in this article and I think it is a good range to roughly estimate what the fees should be for your ADU project. As you are setting your overall project budget it would be wise to pencil in fees in that range. The percentage can vary depending on the quality of the designer (higher fees often mean more experienced, better designers!), the complexity of your project, and the overall scope of work you ask the designer to handle for you.

This percentage range probably translates into an actual fee in the $20,000 to $50,000 range based on average costs of detached new construction ADU projects these days. We find that most ADUs come in at between $200,000 and $400,000 with some fancier, more luxurious designs coming in even higher than that.

This might sound like a lot of money, but like we discussed above, think of design as an investment, not a fee. You are hiring an expert to guide you through the process, help you make the best decisions for your project, and to be an advisor who has your best interest in mind as they work on your project.

Investing in design is money well spent. I even argue that the higher the design fees the better your project will come out. With higher fees you will get to hire a more experienced team, you will get more attention, and that expert design team can spend more time working to make your project a big success.

7. Start With A Total Project Budget (Design Fees Are Not An Added Cost):

Too many people take the viewpoint that the cost of hiring a designer is an added fee increasing their project cost. You may look at design as a place that you can save money. This is the wrong viewpoint.

Begin by developing a total amount you are willing to invest in your project. Say it is $300,000 all-in. Now you work backwards from that number to break down your budget into different buckets.

Say there are $10,000 in estimated permit fees. Investing in a expert design team runs $30,000. Add $4,500 for structural engineering, $5,000 for a survey, and $500 for title 24 report. That is a total soft cost amount of $50,000, which leaves a construction budget of $250,000 for the ADU itself. You should be able to get a high quality ADU designed by a team of experts all within the total project budget.

Looking at the chart below, you can see how small the design fees actually are in the context of the total project cost.

In conclusion, while design fees for your ADU project may initially seem like an added cost, they are, in fact, a prudent investment in your project's success. Allocating 10-15% of your budget to design fees ensures you receive a customized, code-compliant, and aesthetically pleasing design. The expertise, tailored solutions, and regulatory know-how that an experienced designer provides can save you time, money, and stress in the long run. Moreover, a well-designed ADU can increase your property's value and generate long-term savings, making it a sound financial decision. So, don't hesitate to invest in professional design services; it's an investment that pays dividends in the quality and value of your ADU project.

ADU Design Considerations for Short-term vs Long-term Rentals

In recent years, the popularity of accessory dwelling units (ADUs) has surged due to their potential as income-generating properties. Homeowners are capitalizing on the opportunities provided by short-term rentals, such as Airbnb or VRBO, or long-term rentals to supplement their earnings. However, when it comes to designing an ADU for these rental purposes, there are several important considerations to keep in mind. In this blog post, we will explore the key design considerations for both short-term and long-term rental ADUs.

Short-Term Rental ADUs

Flexibility and Guest Experience

When designing an ADU for short-term rentals, flexibility is key. Consider incorporating modular furniture that can be easily rearranged to accommodate varying guest preferences. Additionally, emphasize the overall guest experience by selecting high-quality and durable materials, modern amenities, and stylish furnishings that align with the target demographic. Strive to create a space that feels inviting, unique, and comfortable to ensure positive reviews and repeat bookings.

Knowing that the short-term rental market is becoming increasingly competitive, consider design elements that enhance the guest experience while becoming instagrammable moments. Let your guests help you market the rental through their social media and referring your rental to other potential guests.

Privacy and Separation

Ideally, an ADU designed for short-term rentals should provide a sense of privacy and separation from the main residence. Consider features such as a separate entrance, dedicated outdoor spaces, and soundproofing measures to minimize any disturbances between guests and hosts. A well-designed layout with distinct sleeping areas and private bathrooms can enhance the overall appeal of the space. Specifically, a detached ADU is an ideal unit because it is physically separated from the main house.

Functional Kitchen and Amenities

A fully-equipped kitchen with modern appliances is a significant factor for guests who prefer short-term rentals as they often are choosing to stay in an Airbnb rather than a traditional hotel. Ensure the ADU's kitchen is well-designed, with ample counter space, and essential cooking utensils, and easy to use appliances. Other amenities, such as laundry facilities, reliable internet, and entertainment options, should also be considered to enhance the overall guest experience.

ADU Storage Solutions

Short-term rental ADUs often attract guests who may have a fair amount of luggage. Incorporate clever storage solutions, such as built-in closets, shelving, or under-bed storage, to maximize space and allow guests to keep their belongings organized during their stay.

Long-Term Rental ADUs

Functional and Practical Layout

While short-term rentals prioritize aesthetic appeal, long-term rental ADUs should focus on practicality and functionality. Ensure that the design places emphasis on optimizing the available space for everyday living. Consider incorporating features like ample storage space, efficient floor plans, high performance systems, and and elegant and durable materials to cater to long-term tenants' needs.

Private Outdoor Spaces

Long-term tenants often appreciate outdoor spaces where they can relax and unwind. Design the ADU to include private patios, balconies, or even small gardens, providing a sense of tranquility and allowing tenants to enjoy some fresh air, and make the smaller size of an ADU feel larger.

Sustainable and Cost-Effective Features

Long-term rental ADUs can benefit from energy-efficient designs and cost-saving features. Consider integrating energy-saving appliances, LED lighting, efficient insulation, and solar power options. These features not only reduce utility costs for tenants but also align with environmentally friendly practices. They can also help your ADU rental unit stand out in the competitive rental market.

Privacy and Noise Reduction

Long-term tenants typically value privacy and minimal noise disruption. Incorporate measures such as soundproofing materials, separated entrances, and well-insulated walls to create a peaceful living environment. Adequate separation and privacy between the main residence and ADU are also essential to ensure a harmonious coexistence.

ADU Storage Considerations

Considering ADUs are smaller dwellings, careful consideration should be paid to the design of storage space. For long term tenants, you may want to consider spaces for larger items like bikes, camping gear, and even car parking. Ample closet space for clothes and personal belongings is a great start, but often people who live in a rental long-term have other items and dedicated storage space can be a huge selling point for your ADU.

Conclusion

Designing an ADU for short-term rentals versus long-term rentals requires distinct considerations to appeal to the target renters. Short-term rentals should prioritize flexibility, guest experience, and privacy, along with functional amenities. On the other hand, long-term rentals should focus on practical layouts, efficient use of space, and sustainable features, while also prioritizing privacy and peace for tenants. By carefully considering these factors, homeowners can ensure their ADUs cater to the specific needs and preferences of their chosen rental market, ultimately maximizing the property's income potential.

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At Modern ADU Plans we have designed dozens of ADUs for both short-term, Airbnb style rentals, as well as units for long-term rentals. We now offer a range of designs that well suited to help you add an ADU to your property and start earning income from a rental unit. Check out all of our available designs here:

Open and bright living rooms are great for rental units - both short and long-term.

Providing outdoor living space makes smaller ADUs feel more spacious and are an attractive amenity for rental units.

ADU Design Guidelines: Sustainable Features

Adding an Additional Dwelling Unit (ADU) to your property can be a great way to increase rental income or extend the life of your home. But before you start construction, it's important to make sure that your ADU is designed in a way that is both sustainable and eco-friendly. In this blog post, we will discuss some of the most important features to consider when designing an ADU.

Orientation

The orientation of an ADU plays a vital role in maximizing sustainability. By carefully considering the placement of windows, doors, and the overall layout, homeowners can optimize the use of natural light and ventilation. Orienting the ADU to capture an abundance of sunlight can reduce the reliance on artificial lighting during the day, ultimately saving on energy consumption. Additionally, strategic positioning can promote passive cooling and heating, reducing the need for excessive air conditioning or heating systems. For instance, placing windows on opposite sides of the ADU allows for cross-ventilation, ensuring fresh air circulates throughout the space. By prioritizing sustainable orientation, ADUs can minimize their environmental impact while providing comfortable and energy-efficient living spaces.

Materials

In designing an ADU, incorporating sustainable materials is a paramount consideration for conscientious homeowners and designers. Utilizing sustainable materials not only promotes environmental preservation but also enhances the overall energy efficiency and durability of the ADU. From the foundation to the roof, sustainable materials can be implemented throughout the entire construction process. Choices such as FSC certified framing, reclaimed wood, bamboo flooring, and locally sourced products not only lend a unique aesthetic charm to the ADU but also significantly reduce the project's carbon footprint. Additionally, extra insulation coupled with active systems like solar panels and efficient heat pumps for heading and cooling can optimize energy efficiency, reducing the dependency on traditional energy sources - potentially even making your ADU net-zero energy. By employing sustainable materials, every aspect of an ADU's design can contribute to a greener and more sustainable future.

Active Systems

Active systems play a crucial role in contributing to the sustainable design of an Accessory Dwelling Unit (ADU). Incorporating renewable energy sources such as solar panels can provide clean electricity to power the electrical components of the ADU. Other systems to consider include installing a rainwater harvesting system which can collect and store rainwater for various purposes, reducing the dependency on municipal water sources. Furthermore, incorporating a geothermal heating and cooling system can utilize the stable temperature of the earth to efficiently regulate indoor climate, reducing the need for fossil fuel-based heating and cooling. These active systems not only decrease the environmental impact of the ADU but also contribute to long-term energy savings, making them an essential component of a sustainably designed ADU.

Passive design strategies for ADUs

Passive strategies are crucial for the sustainable design of an Accessory Dwelling Unit (ADU). By incorporating these strategies, homeowners can achieve energy efficiency and reduce environmental impact while ensuring a comfortable living space. For example, designing the ADU to maximize natural daylight, utilizing large windows and skylights, may reduce reliance on artificial lighting during the day, thus saving energy. Another strategy is proper insulation and air sealing, which prevents heat loss in the winter and heat gain in the summer. This reduces the need for excessive heating or cooling, resulting in significant energy savings. Additionally, passive solar design can be implemented by orienting the ADU to capture natural sunlight and heat, coupled with interior thermal mass from things like concrete floors you can reduce the need for artificial heating and lower overall energy consumption. By integrating such passive strategies, ADUs can contribute to a sustainable and energy-efficient living environment for homeowners. Plus, passive strategies often don’t cost any more to incorporate into your ADU project.

Simplicity and Less is More

Embracing simplicity and adopting a "less is more" approach can prove to be a prudent strategy for a sustainable ADU project. By prioritizing simplicity in design, construction, and functionality, we can reduce the environmental impact associated with materials, energy consumption, and waste generation. A minimalistic approach not only promotes efficient resource allocation but also encourages thoughtful use of space, enabling the creation of compact, smartly designed living areas that optimize functionality within a smaller footprint. By consciously scaling down, we reduce the demand for resources and energy, curbing both carbon emissions and operational costs. Moreover, a simpler design aesthetic can withstand the test of time, reducing the need for frequent renovation and minimizing the consumption of additional materials over the lifespan of the ADU. In essence, simplicity and a "less is more" mentality offer a sustainable pathway for an ADU project that focuses on responsible and efficient resource utilization in an environmentally conscious manner.

In conclusion, ADUs have emerged as a practical and sustainable solution to address the changing needs of homeowners and communities across the country. With their flexibility, affordability, and minimal impact on the environment, ADUs have transformed the way we think about housing. By providing an additional living space, ADUs not only offer a way to combat the housing crisis but also promote multigenerational living, create opportunities for rental income, and foster community cohesion. As cities adapt their policies and regulations to facilitate the construction of ADUs, it is clear that these innovative structures will continue to play a crucial role in shaping the future of housing, offering both homeowners and renters a versatile and efficient living option. The next step is making every ADU as sustainable as possible, to ensure that these housing types are great for our communities as well as the environment we call home.

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Create your dream space today - purchase an ADU plan and unlock the potential of a versatile, stylish, and functional backyard home for your property.

To make this ADU as energy efficient as possible we wrapped the entire thing in rigid exterior insulation (3” on the roof, and 2” on all of the walls. The building envelope is so efficient that the heating system rarely turns on in the winter.

Unlocking the Potential of Your Property: The Power of Backyard Cottage Plans

Are you a homeowner looking to optimize the space on your property and create an additional living area that serves multiple purposes? Look no further than the charm and versatility of a backyard cottage, otherwise known as an accessory dwelling unit. In this article, we'll explore the many benefits of incorporating a backyard cottage into your property and discuss why purchasing a pre-designed ADU plan can be a game-changer. From accommodating loved ones to generating rental income, backyard cottages offer a range of possibilities. So, let's dive into the world of backyard cottage plans and discover the transformative potential they hold.

Maximizing Your Space with Backyard Cottage Plans

Backyard cottages, also known as accessory dwelling units (ADUs), have emerged as a popular solution for homeowners seeking to maximize the the potential of their property. By utilizing the available space in your backyard, you can unlock the untapped potential of your property and enhance its value - all for less investment than purchasing another property.

The benefits of having a separate living area within your property are numerous. Firstly, backyard cottages provide a convenient and comfortable space for accommodating guests. Instead of squeezing visitors into your main residence, a separate living area offers privacy and independence for both you and your guests, especially for extended stays. Additionally, a backyard cottage can serve as an ideal home office, providing a quiet and dedicated workspace away from the distractions of your primary dwelling. This setup promotes productivity and work-life balance and is an increasingly popular home amenity with more and more remote or hybrid work arrangements. Furthermore, backyard cottages open up opportunities for generating rental income. By renting out the cottage, homeowners can generate passive income or offset mortgage costs, making it a smart financial investment.

When considering the construction of a backyard cottage, opting for a pre-designed plan offers significant advantages. A pre-designed backyard cottage plan streamlines the construction process and saves valuable time. These plans are meticulously crafted by experienced ADU designers who understand the intricacies of ADU construction and maximizing the livability of smaller sized dwellings. By choosing a pre-designed plan, you gain access to a comprehensive blueprint that is tailored to maximize functionality and beautiful, modern aesthetics. This eliminates the need to start from scratch and go through the time-consuming design and approval process. With a pre-designed plan, you can confidently move forward with your ADU construction project, knowing that you are working with a proven design that limits your risk.

Convenience and Efficiency of Pre-Designed ADU Plans

Most homeowners like you want to see what you are going to get before paying for an ADU design. Pre-designed ADU plans are a great way to start the path to building an ADU in your backyard while seeing the design before you get started. It takes the guesswork out of the design process.

Purchasing an ADU home plan also is more convenient than going with a custom design as most of the work is already done. It saves months of time and eliminates the stress of having to make hundreds of design decisions. Starting with a ready-to-use ADU blueprint makes adding a backyard cottage a relatively simple process which ultimately saves both time and money.

One the biggest benefits of selecting one of our modern ADU designs is that they are all crafted by experienced designers who have been designing beautiful ADUs for years. The plans are proven to be livable, efficient uses of space, and offer a range of styles that can compliment almost any main home. Our plans are carefully crafted to be incredibly functional and are optimized to provide great places to live within the size limitations placed on ADU projects.

By not starting from scratch you get reduced cost, a faster timeline to completion, and a proven ADU design that is beautiful, functional, and affordable.

Customization within Pre-Designed Backyard Cottage Plans

Although we believe that the best option is to pick the plan that best meets your needs and jump right into the engineering and permitting process, we understand that sometimes you may want to make some tweaks or revisions to the ADU plans we offer. Customization is definitely a possibility and can still end up being more affordable than going with a fully custom ADU design process.

We work closely with many of our clients to make adjustments to our plans to meet your needs or taste. This can include small tweaks to the interior layout, kitchen cabinets, or windows, to larger changes to the overall form and structure. Of course, there will be some extra fees for this work and the more changes you make the higher those need to be. But overall this is still a very economical way to get a beautiful ADU that is semi-custom and adjusted to your unique property or project goals.

Along with some design changes that need to be documented in the drawing set in order to get engineering and building permits approved, there are many smaller changes that you can control later in the process. There is a lot of flexibility with the selection of interior finishes that you can make further down the road. Things like tile selection, cabinets, countertops, and even flooring or light fixtures can be ways that you can put your fingerprint on the project and customize the design to meet your taste.

If there is one of our designs you are leaning towards but you have ideas for changes, don’t hesitate to reach out and we can discuss doing a semi-custom projects specifically for you. We will simply listen to your ideas, offer some thoughts, and then put together a proposal based on the agreed upon scope of work. It is simple, straight forward and with our fixed prices you never pay more than what we quote for the changes.

Time and Cost Efficiency of Pre-Designed ADU Plans

None of us have enough time, especially when you are balancing jobs, family commitments, and want some time leftover for fun, hobbies, or relaxing. Saving time is one of the biggest values of starting with a pre-designed ADU or guest house floor plan. Starting with a plan set eliminates the lengthy design process typically associated with custom ADU designs. In general we typically find that a custom design takes about 6 months from start to being ready to submit for permit approval. Starting with a pre-designed plan for your backyard cottage or rental unit can bring that timeline down to just a month or so.

And since you are starting with a set of drawings ready to go, you can bring them straight to a contractor to get cost estimates on day one. Rather than working for months crafting a design only to find it is above your budget, starting with a finished plan can give you a better sense of the total project cost from day one. In fact, some of our clients have come to us with a builder already on board so they get rough cost feedback prior to making a purchase. This makes budgeting and financial planning more manageable for your ADU project.

Let's also talk about design fees here for a minute. We have designed over 50 custom ADU projects and have talked with architects and designers who have done hundreds of these projects. In general you can expect to pay between 10-15% of the total project cost on design fees when going the custom route. Prices can vary but if you see fees that are much lower than that I’d have serious reservations about the quality of the design you will receive. On the other hand our designs start at around one thousand dollars. This is a huge cost savings when compared to the custom route. Even if you want to make some revisions to our designs, the final price will typically be less than half of the cost of a custom ADU design.

We can provide our plans at a fraction of the cost because of economies of scale. We develop our designs to work on a wide range of properties, fit a range of styles, and come in a variety of sizes and configurations so we don’t have to start from scratch for each project. These savings are passed on to you.

Peace of Mind and ADU Expertise

Starting a project of this magnitude can be intimidating and stressful. ADUs, although relatively small in size, still are a significant investment. Our goal is to give you peace of mind and start you off on the right foot. We have over a decade of experience designing ADU projects and embed this vast design knowledge into each plan set. Our pre-designed backyard cottage plans are created by professionals with experience in ADU design and construction, giving you a higher quality project for a much lower cost.

The plan you select has been carefully crafted to reduce the risk of design flaws or unforseen issues. Our experience leads to plans that are relatively simple and affordable. They maximize the use of space - which is imperative in these small homes - and recommend systems that are efficient and increase the comfort of living in the ADU.

And importantly we offer support, guidance, and access to additional resources and knowledge to help your project be a success. Along with the drawings themselves we offer consultations, custumizations, and can be on call if you need additional design support.

Conclusion

Backyard cottage plans offer homeowners like you an incredible opportunity to maximize your property's potential, whether it's creating additional living space, accommodating loved ones, or generating rental income. By choosing a pre-designed ADU plan for your backyard cottage, you gain the convenience of a ready-to-use blueprint, customization options, time and cost efficiencies, and the assurance of expert design. So, why wait? Take the leap and unlock the transformative power of a backyard cottage plan, and watch as your property evolves into a haven of functionality, comfort, and value.

Backyard cottages and ADUs can be great guest houses, rental units, or homes to downsize into. They can be integrated into your backyard to preserve privacy between the main house and ADU while allowing the new home to open up to the outdoors. And by starting with a pre-designed plan you can see what you are getting before you start!

The Benefits of Modern Design for Your ADU: What You Need to Know

As the popularity of accessory dwelling units (ADUs) and laneway houses continues to rise, so does the demand for modern designs that fit seamlessly into their surroundings.

When it comes to ADU design, modern style has become increasingly popular in recent years. But what does "modern design" actually mean for ADUs, and why should you consider it for your next project? In this blog post, we'll take a closer look at modern design principles that we incorporate into ADUs.

Minimalism and Simplicity

One of the key features of modern design is minimalism and simplicity. This means that modern ADUs often have clean lines, simple forms, and a lack of ornamentation. The focus is on functionality and practicality, which can be especially useful when designing a small space like an ADU. We believe in the philosophy of less, but better. Meaning we keep the form of our ADU designs simple and efficient but invest in high quality systems and materials leading to a better end result. Consider quality over quantity.

Natural Materials

Modern design also emphasizes the use of natural materials, such as wood, stone, and metal. These materials are often used in their raw or untreated state, giving the ADU a more organic and authentic feel. The use of natural materials also helps the ADU blend in with its surroundings and create a more harmonious relationship with nature. We love natural cedar siding, exposed wood in the interiors, and concrete floors. Being true to the materials lets us celebrate how our buildings are built while relying on the natural beauty of the material to be the defining design features in our ADUs.

Energy Efficiency

Modern design principles often prioritize energy efficiency and sustainability. This means incorporating features such as high-quality insulation, efficient heating and cooling systems, LED lighting fixtures, and energy-efficient appliances. By designing an ADU with energy efficiency in mind, you can reduce your carbon footprint and save money on utilities in the long run. This coincides with the simple forms we discussed above, as we aim to design tight building envelopes that are energy efficient and optimized for the local environment.

Open Floor Plans

Another hallmark of modern design is open floor plans, which prioritize flow and connectivity between different spaces. In an ADU, an open floor plan can help create a sense of spaciousness, even in a smaller space. It can also make the ADU feel more versatile and adaptable to different uses. The best example of this is by designing a “great room” that combines the kitchen, dining, and living spaces into one open room. This helps make smaller sized ADUs feel spacious and they are more functional than having separate rooms for each function.

Large Windows and Natural Light

Modern design principles emphasizes the use of large windows and natural light to create bright and airy spaces. This can be especially important in an ADU, where space may be limited. By incorporating large windows and plenty of natural light, you can create an inviting and comfortable space that feels much larger than it actually is. Additional benefits include using natural light which can reduce energy use, and natural ventilation which can create a more comfortable and healthy indoor environment. Plus we use large windows and sliding doors to make strong visual impact on our ADU designs, creating more beautiful design solutions.

Conclusion

Modern design can help create ADUs that are both functional and aesthetically pleasing. By prioritizing minimalism, natural materials, energy efficiency, open floor plans, and natural light, you can have an ADU that is perfect for your needs. Whether you're building an ADU as a rental property, a guest house, or a place for aging relatives to live, a modern design can help you achieve your goals while creating a beautiful and comfortable space that will stand the test of time.

If modern design is inspiring for you and you would like to discuss building an ADU please reach out. We would love to talk through your ideas and project goals and offer advice to help you succeed with your project. Or if you are ready to move forward with a predesigned ADU plan, check out our Modern ADU Plans available for purchase today.

Simple form, natural materials, and large sliding doors are hallmarks of our focus on modern design.

Clean lines, natural materials, and views to the garden define this modern kitchen design.

Why settle for prefab? Here's why a custom ADU design is the way to go.

When it comes to building an accessory dwelling unit (ADU), there are two main options: choosing a prefabricated unit, or investing in a custom ADU design. While prefab ADUs seemingly offer a quick and easy solution for those seeking an additional dwelling space, they are not the best fit for everyone. Here are a few reasons why a custom ADU design might be the way to go to achieve your ADU dreams.

An ADU tailored to your needs and preferences

A custom ADU design allows you to tailor your unit to your specific needs and preferences. With a prefabricated ADU, you are often limited to a set number of design options that may not fit your unique needs. A custom ADU design, on the other hand, allows you to work with a designer or architect to create a space that is exactly what you need and want. Having worked with hundreds of clients over the years, we love taking client’s ideas and crafting beautiful solutions. Even with our pre-designed ADU plans, we offer customization services to adapt the designs to client’s needs.

An ADU that fits your property

One of the biggest downsides to a prefab ADU is that it may not fit your property. Because these units are pre-designed, they may not work with the specific layout of your property, potentially leading to difficulties during installation. Features such as trees, existing structures, site topography, or adjacent power lines or other utilities could hamper the ability to install a prefabricated ADU. With a custom ADU design, you can ensure that the unit fits your property and takes advantage of site features, orientation, views, and other strategies to seamlessly integrate the new unit to your property.

Materials, systems, and finishes selection

While prefab ADUs are often marketed as a more affordable option, the materials used in their construction are typically pre-selected by the company fabricating the unit. There is limited opportunity for you to pick the materials, finishes, fixtures, and systems that will define the look and feel of your ADU. A custom ADU design allows you to choose the materials, leading to a design that aligns with your style. Plus you have the opportunity to focus on picking materials for durability, quality, and sustainability.

An environmentally friendly ADU

Custom ADU designs can be more environmentally friendly than prefab units. One of the biggest advantages of a custom design is it can be tailored to respond to the site, climate, and take advantage of active and passive strategies for sustainable design. Orienting the ADU’s roof towards the sun and adding a PV system could make your ADU a net-zero energy home. Designing the unit to get natural light and ventilation can reduce energy usage further and create a healthy indoor environment. Because you are able to choose the materials, systems, and features of your unit, you can select high-performance, environmentally friendly options such as energy-efficient appliances, solar panels, solar hot water systems, and sustainable building materials. This can lead to a lower environmental impact and reduced energy costs over time.

Custom design doesn’t have to cost more

Many prefab ADU companies will advertise that their units are more affordable than a custom solution. On the surface this could look like it is true. The price tag on many prefab accessory dwelling units are very attractive. However, it is important to consider the full costs of adding an ADU. Often prefab ADU prices don’t include things like site prep, getting utilities to the ADU, concrete work, pathways and landscaping, permitting fees, and other important aspects of adding an ADU. At the end of the day, the size of the unit, quality of materials selected, and the finishes, fixtures, and systems chosen for the ADU are the biggest determining factor of project cost. A custom design could come in at the same overall cost as a prefab unit and in some cases could even be cheaper. We have designed many nice ADUs that are comparable in cost to the prefab designs we see on the market.

In conclusion, while prefab ADUs can be a quick and easy solution for some, a custom ADU design is often the better option. With a tailored design for your taste and property, ability to select all the materials, and the ability to design a great accessory dwelling unit within your budget, a custom ADU is a smart investment in the long run.

We would love to help you achieve your ADU goals. whether through a fully custom design or by starting with one of our pre-designed ADU plans and adapting it to meet your needs. You can check out our plans for sale here, or contact us if you are thinking about doing a custom ADU.

Custom ADU interior with exposed wood structure and a series of skylights to bring in lots of natural light.

Exterior rendering of a custom ADU design. The simple form makes for an affordable project while the natural cedar siding, large sliding glass doors, and metal roof make for a high quality and beautiful home.

10 Design Features of Accessible ADU Plans

Designing an accessible ADU is an important consideration for homeowners who want to create a living space that accommodates the needs of all individuals, regardless of mobility or disability. This is especially important when building an ADU for an aging family member, or when downsizing your home as you get older. By incorporating universal design principles and accessibility features into ADU plans, homeowners can create a space that is functional, comfortable, and safe for everyone. In this blog post, we will explore the key design features of accessible ADU plans. We will also highlight some of the benefits of designing an accessible ADU and provide tips for homeowners who are considering this type of project.

10 Design Features of Accessible ADU Plans:

1. Wide doorways and hallways: Accessible ADUs typically have wider doors and hallways to accommodate wheelchairs and other mobility devices. This also may lead to extra space around furniture to allow for easy movement around the accessory dwelling unit.

2. No-step entry: A no-step entry eliminates the need for stairs or steps, making it easier for wheelchair users to enter and exit the ADU. This could take the shape of a ramp or landscaping paths that lead up to the ADU level. We also typically look to do slab-on-grade construction for ADUs to keep the floor level as low as possible to allow for easier transitions.

3. Open floor plan: An open floor plan provides plenty of space for maneuvering a wheelchair or mobility device. This design feature also allows for flexibility in furniture arrangement.

4. Accessible kitchen: An accessible kitchen typically features countertops at a lower height, ample floor space for turning a wheelchair, and accessible appliances and storage. We used these strategies in the kitchen design for the Modern Japandi ADU - with custom height counters at 32” plus a space on the island without lower cabinets so a wheel chair could roll under the counter.

5. Accessible bathroom: An accessible bathroom often includes features such as a roll-in shower, grab bars, and a toilet with sufficient clearance on both sides. For the Modern Japandi ADU we did a barrier free shower, extending the floor and wall tiles into the shower area for seamless transition. We also used a special toilet paper roll hanger that doubles as a grab bar. We put extra blocking in the walls of the shower so additional grab bars could be added in the future. We also made sure to specify a shower head that had a hand shower attachment which is helpful when bathing with limited mobility.

6. Lever handles: Lever handles on doors, cabinets, and faucets are easier to operate than traditional knobs and handles, making them ideal for individuals with limited hand strength or mobility.

7. Non-slip flooring: Non-slip flooring can help prevent slips and falls, which can be especially dangerous for individuals with mobility impairments. We carefully select tiles and other flooring materials that won’t get slippery even when wet.

8. Adequate lighting: Adequate lighting is important for individuals with low vision or vision impairments. A well-lit ADU can also help prevent falls and accidents. WIth ample light fixtures and dimming switches we aim to give a wide range of lighting options that can be adjusted based on the time of day or lighting needs for specific activities.

9. Universal design: Universal design principles aim to create spaces that are accessible and usable by everyone, regardless of age or ability. Accessible ADUs often incorporate universal design features to make them more functional and appealing to a wider range of users.

10. Single Floor ADUs: this one may be obvious but many of our ADUs are designed as a single level to allow them to be more accessible for all. Stairs are a big barrier and a risk when getting older. Making sure there is at least one bedroom and one full bathroom on the main level of the ADU, or having the entire ADU on one level makes it possible to be converted into an accessible ADU that is ideal for aging-in-place.

By incorporating these design features into accessible ADU plans, homeowners can create a living space that is functional, comfortable, and safe for individuals with disabilities or mobility impairments. Accessible ADUs can also provide a valuable solution for families seeking a home that accommodates their unique needs.

We have worked with clients on a range of accessible ADU designs and have translated our lessons learned into many of our available ADU plans for sale. Check out our shop for the single level ADUs. We can also work with you to make adjustments to one of our designs or custom design an accessible ADU that will meet your needs.

This bathroom was designed specifically for accessibility. The room has extra width allowing for the turning radius of a wheel chair. The toilet paper holder is designed to double as a grab bar to assis with getting on and off the toilet. The shower is barrier free with the tile seamlessly flowing into the bathing space with a linear drain across the back. The shower is equipped with a hand shower making bathing easier from a seated position.

Prefab ADUs vs Pre Designed ADUs vs Custom Designed and Built ADU

You may be thinking about adding an ADU to your property and considering the best option to achieve your goals. There are three primary ways to deliver an ADU project: Prefabricated ADUs, Pre Designed ADUs, and Custom Designed ADUs. All have their strengths and weaknesses which we discuss below.

Prefab ADU

Before we discuss the strengths and weaknesses of this approach lets quickly touch on the definition of Prefab vs Modular and other common terms. Prefabricated typically refers to projects where all, or parts of the building are manufactured in a factory and shipped to the site to be assembled. This could be wall panels, roof trusses, and other specific building components, or could be the whole unit itself. Modular construction is typically referring to projects where the whole unit is made off site and shipped as a single object and the placed on a foundation. Sometimes multiple modules are combined together to complete the structure. For example, when you are driving on the highway and see those extra wide load trucks with homes on the back, that would be a modular home. If you see a truck that is flat packed with wall panels, that would be prefabricated. For this article we lump these two approaches together in this prefab ADU category.

The main advantage to prefab is a potentially faster schedule, and that build quality could be better within a factory where they don’t have to deal with weather and other site conditions and where machines and better tools could allow for more accurate construction. Many prefab companies will state that their builds are higher quality with smaller tolerances when compared to site build ADUs.

The other advantage is that often these can be built ahead of time and sold as a product, meaning the length of time for the construction can be dramatically cut down. If the unit is already built and just needs to be shipped to site, all that would be needed is site specific work like utilities, foundations, etc. at which point the finished unit could be craned into place and installed in a couple of days.

While the time argument is compelling, not many of the prefab companies have inventory of units sitting around waiting to be sold. Most build to order and have long lead times as demand increases and labor is hard to come by. Often it takes just as long to order and receive a prefabricated ADU as it does to custom build one on site. Hopefully this is a short term challenge and over time prefabricated units will become available in a shorter timeframe. When this is the case it will be a very compelling argument to choose a prefabricated ADU.

There are a couple downsides to Prefabricated ADUs. The primary one is that your choices for the design is limited. These ADU projects are predesigned and manufactured so you don’t have the ability to adjust the design, select different materials, and make other revisions that you may get to make if you were going a more custom route. The other challenge is that these projects show up to site as large objects that need to be moved into place, meaning often you need a crane and other large equipment to help assemble the ADU. The drawback here is that there could be site conditions that prevent prefabricated units from being viable at all. Overhead power lines, trees, steeply sloped sites, and other conditions may make your property unable to accommodate a prefabricated unit.

It is important to check with the company and share details about your property to verify if they can actually install their product on your property, and what additional installation costs may be required.

The other issue to look carefully at before moving in this direction is the cost. It is important to understand the base cost of the prefabricated parts of the project, with the additional cost required for the site specific work. You may see a prefab ADU being advertised for say $200,000 but typically that wouldn’t include things like excavation, concrete foundation work, utility installation, complications with access to the site, landscaping and other costs that you would need to incur. When comparing prices make sure you are comparing the total project costs and not just the cost of the prefabricated ADU itself. These additional costs could add thousands of dollars and maybe even $100,000 or more depending on the specifics of your property. I’m not trying to scare anyone away from exploring prefabricated accessory dwelling unit options, but know that the sticker price on a website may not be the full project cost to you.

Pre Designed ADU

Where Prefab ADUs are a fully built unit shipped and installed on site, Pre-designed ADUs are where you are simply purchasing the design drawings for an ADU project. Typically this could be a PDF file, a CAD file, or perhaps a Sketchup or BIM file like Revit or ArchiCAD. Most likely it would be a PDF of the ADU plans that you could then print, share with a local designer or engineer to make revisions, and submit for permit review at your local building department.

There are many advantages to starting your ADU project with a pre-designed plan set. It can save a significant amount of time when compared to going with a custom designed ADU project. Instead of working with a designer to start a new design from scratch you can pick a design that you like and meets your project goals and then just make some small revisions to get it ready for permit approval. We find that starting with ADU plans can save approximately 4-5 months of time.

When you save time, you also save money. Hiring a designer or architect to design a custom ADU should cost about 10% of the project budget. For a nice $300,000 ADU that would mean design fees of around $30,000. Although, this can be great value when the custom designed ADU is specific to your property, aesthetic taste, and project goals, for those who can’t afford this premium price, starting with a pre-design accessory dwelling unit can cut this fee significantly. We sell our plans for around $1,000 and often make small revisions for another $1,000 to $2,000 for our clients. You can then take the drawings to a structural engineer to complete their work for another few thousand dollars. Alltogether you can probably get a permit ready set of drawings for close to $5,000 or less. This is much more affordable for most people than going with the custom route. All of our plans are designed by talented architects and designers who specialize in ADUs, and many are award winning designs, meaning you are getting a high-quality design for a fraction of the cost of a custom ADU.

Another advantage to a pre-designed ADU is that you can get construction cost estimates done pretty early in the project. If you have engaged a general contractor already, they can probably give a good estimate of what a design would cost by analyzing the ADU design drawings and/or seeing images of other built projects with the same design. You can also ask the company selling the plans about cost estimates from other builds. Having this cost information up front can help you develop a project budget and know whether the ADU will be a good investment.

This all being said, there are many reasons why a custom ADU design could be the best approach for your project. We will explore that in the next section.

Custom Design and Built ADU

To be honest, if money wasn’t a barrier, I would recommend that everyone go with a custom designed ADU project. Hiring a skillful designer to craft an ADU design that is specific to your goals, taste, and property can give you the best result. However, it is never the case that money isn’t a factor in people’s decisions.

Custom ADU design is definitely the most expensive option of the three. It also probably takes the longest as you have to work with the designer to develop design ideas, work through iterations, and ultimately land on the best solution for the project. We typically estimate that the design process takes about 5-6 months for most of our clients. This could be longer or shorter depending on your ability to make decisions, the size and complexity of the project, and the local jurisdiction and their rules and regulations. Often there are city requirements that require additional work or bringing on other consultants that can add time and cost to the design phase. .

The other aspect of custom designed ADUs is that often people who go this route want something more unique or higher end. Even when they say they are on a tight budget, in our experience people tend to make decisions or select designs or materials that can push up the cost. My opinion is that you get what you pay for and often these decisions lead to better quality projects that are beautiful spaces to live. But it is important to consider that once you start designing, the sky is the limit and you may talk yourself into doing something higher end than what you started out imagining. This can be both a pro and a con to going with a custom designed accessory dwelling unit.

Advantages start with designing something specific to your property. Taking cues from the main house, the site topography, solar orientation, views, landscape features, neighborhood context, privacy concerns, and the taste of the owner means that a custom design project can really perform better than most other options. It allows you to make adjustments that mean the ADU can fit seamlessly into the surroundings and compliment what is already there. You can’t really get this level of site-specific advantages when going with a prefabricated ADU or a pre-designed ADU. This is also why we tend to not recommend garage conversions very often. They just limit what is possible by too much, meaning the end result is not ideal for what you could get with a fully custom, ground up construction ADU.

If you can afford it, we would highly recommend this approach. If budget is tight, that is when you should definitely start exploring the other options described above.

If you want to learn more about our custom design services, please contact us and tell us more about your project goals.

One of our favorite designs is this split level ADU that stacks two bedrooms while providing a light filled living space with open kitchen, living, and dining areas. The large floor to ceiling glass provides great views and natural light to flood the interior, making the smaller sized ADU feel much larger.

Features of The Best ADU Designs

What makes one ADU design better than another? Lessons learned from designing over 60 custom ADUs and offering award winning pre-designed ADUs has lead us to some fundamentals in good ADU design. Designing the best ADU for your property requires careful planning, consideration of your needs, and the help of an experienced design team. Through years of experience we have crafted beautiful and functional ADUs that are some of the best available plans on the market. In this blog post, we'll explore what makes the best ADU design.

1. Functionality and Flow

   The best ADU designs take into account the function and flow of the space. A well-designed ADU should feel spacious and open, with well-defined areas for living, sleeping, and cooking. The layout should flow smoothly from one area to another, and provide ample storage space. The design should also take into account the specific needs of the inhabitants, such as mobility and accessibility requirements. Since ADUs are smaller homes, it is imperative that their layouts are efficient and functional.

2. Energy Efficiency

   Another important aspect of the best ADU design is energy efficiency. An ADU that is built with energy-efficient materials and features can save you money on your utility bills and reduce your environmental impact. Features such as continuous insulation, low-flow fixtures, and energy-efficient appliances can help you save on energy costs, while also making your space more comfortable and sustainable. Passive strategies like sun shading, natural light, thermal mass and other features are things that a great ADU design can incorporate.

3. Integration with the Existing Property

   The best ADU design is one that seamlessly integrates with the existing property. A well-designed ADU should complement, but not necessarily mimic, the style and character of the main home, while also providing a unique and independent living space. It's important to consider the landscaping and outdoor areas when designing an ADU, so that the entire property looks cohesive and well-designed.

4. Privacy and Comfort

   Privacy and comfort are also important aspects of the best ADU design. The design should take into account the privacy needs of the inhabitants, as well as provide a comfortable and relaxing living space. This can be achieved through the use of soundproofing materials, adequate lighting, and comfortable furnishings. This is important both in terms of the interior design of the ADU, providing privacy between spaces, as well as between the ADU and the main house.

5. Flexibility and Adaptability

   Finally, the best ADU design should be flexible and adaptable to changing needs. An ADU that can be easily modified or repurposed as your needs change can save you money and hassle in the long run. The design should take into account the possibility of future modifications, such as adding or removing walls, or changing the use of the space - perhaps from a rental unit to a home office, or from a guest suite to a home for an aging parent. One of the true benefits of an ADU is that they can be used for so many things over the years.

In conclusion, the best ADU design is one that takes into account functionality, energy efficiency, integration with the existing property, privacy and comfort, and flexibility and adaptability. By working with an experienced design team, you can create an ADU that meets your specific needs and enhances the value of your property.

The design locates the large floor to ceiling windows overlooking the trees in the backyard, providing great views into nature but lots of privacy from the surrounding houses.

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ADUs As A Strategy For Passive Income

Our Personal ADU Investment Story

If you are considering adding an ADU project to your property as an investment and have any questions, don’t hesitate to reach out. I started this business to help people realize the dream of adding an ADU and starting to earn passive income through real estate investment. Althought I am trained as an architect and have designed dozens of custom ADU projects over the years, it is through building one for ourselves that really proved the power these small projects can have on improving your life and wealth.

My wife and I added an ADU to a property we owned in Portland, Oregon, converting an interior part of a house into a 1 bedroom rental unit. We rolled up our sleeves and did most of the work, from designing a compelling modern interior aesthetic, to lifting a sledge hammer to do the initial demolition work.

The original house was purchased for around $325,000 and we spent about $100,000 on the build to add the internal ADU. We did a lot of the construction work ourselves to save on labor costs - it would be been closer to $150,000 if we hired a GC to do the whole thing. We then rented the ADU for around $1,800 a month. We also rented the main house for around $2,400 per month and the rental income from the two units combined covered the full mortgage payments, maintenance costs, property management fees, and left a a few hundred dollars per month in our pocket.

After 4 years or renting out the property we moved across the country and ended up selling it for about $610,000. Overall, it was a great investment and adding the ADU was a huge part of that. We probably put in about $175,000 in cash including the down payment, property improvements, adding the ADU, and general maintenance and upkeep. Just with the sales price we earned close to a 100% return on that initial investment. Of course a hot market helped a lot, but making two cash generating rental units pushed up the sales price significantly.

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ADUs Are A Great Passive Income Strategy

As the cost of living continues to rise across the country, it has become increasingly difficult for many people to afford their monthly bills and expenses or to purchase property of their own. In order to generate additional income, many people are turning to passive income strategies like investing in real estate. One real estate investment that has become increasingly popular in recent years is building accessory dwelling units (ADUs) on existing properties. This allows you to maximize the investment in your own property, and helps people afford to purchase a home by using rental income to help cover mortgage payments. In this blog post, we will explore the concept of ADUs as a strategy for generating passive income.

What Are ADUs?

ADUs, also known as accessory apartments, in-law units, or granny flats, are self-contained living spaces on the same property as a primary residence. These living spaces are typically smaller than the primary residence and can be used for a variety of purposes, such as rental units, guest houses, or additional living space for family members. ADUs can be attached to the primary residence, such as in the form of a basement apartment, or detached, such as a separate backyard cottage. In general, ADUs are great investments that can have a great ROI.

Why Build an ADU?

There are a number of reasons why building an ADU can be a smart investment strategy. One of the primary reasons is that an ADU can generate passive income in the form of rental income. Renting out an ADU can provide a steady stream of monthly income that can help cover mortgage payments, utility bills, and other expenses. Additionally, an ADU can increase the value of a property, making it an attractive investment option when considering the long term value of a property and future sales price.

Another advantage of building an ADU is that it can provide flexible living arrangements for homeowners. For example, if a homeowner has aging parents who require assistance with daily living, an ADU can provide them with a separate living space while still allowing them to be close to their family. Additionally, if a homeowner has adult children who want to live independently, an ADU can provide them with a more affordable living option. These benefits are financially positive as an ADU could be more affordable than the cost of assisted living or market rate housing in high demand cities, saving significant costs on a month-to-month basis.

How Much Income Can You Generate with an ADU?

The amount of income you can generate with an ADU will depend on a variety of factors, including the size and type of ADU, the location of the property, and the rental rates in the local market. In general, however, ADUs can be a lucrative source of passive income. According to a report from the National Association of Home Builders, the median rental income for an ADU in the United States is approximately $1,400 per month. In higher cost cities like Berkeley, Seattle, Los Angeles, or Vancouver, Canada, it is possible to rent out ADUs for over $3,000 per month. And where you can list them on AirBnB or other short-term rental sites, we have seen people earn well over $4,000 per month in revenue off a well designed ADU.

Of course, the amount of income you can generate will also depend on your rental strategy. If you choose to rent out your ADU on a long-term basis, you can expect to generate a consistent stream of monthly income. However, if you choose to rent out your ADU on a short-term basis, such as through a platform like Airbnb, you may be able to generate even more income per night, although the income stream may be less consistent from month to month.

Beyond the rental income, resale value is another aspect of investing in an ADU, although this technically is not passive income it is still important to consider at the outset of your ADU project. A 2021 study covered in Porch.com showed that homes in the western U.S. sold for about 35% higher than homes without an ADU. When combined with the rental income you can earn prior to selling a property, ADUs almost pay for themselves twice.

What Are the Costs of Building an ADU?

The cost of building an ADU will depend on a number of factors, including the size, type, and location of the unit, as well as the cost of materials and labor in your area. According to a report from the Urban Land Institute, the cost of building a detached ADU can range from $90,000 to $500,000, while the cost of building an attached ADU can range from $75,000 to $250,000. In our experience, when you combine the full cost of the project, including design, engineering, permits, utilities, site improvements, and construction, most ADU projects cost over $200,000 and could be much higher in expensive cities. Yet, this is still a strong investment.

While building an ADU can be a significant investment, it is important to keep in mind that it can also provide a significant return on investment in the form of rental income and increased property value. Additionally, there may be financing options available to help offset the initial costs of building an ADU, such as home equity loans or lines of credit.

Starting with a market analysis of the rental prices can help you work backwards to determine the maximum project budget. As a back of the envelope calculation you can spend about $100 on the development of an ADU for every $1 of monthly rent. For example, if you could rent your ADU for $3,000 per month in Berkeley, California, a comfortable project budget would be around $300,000.

This is just a general rule of thumb and not meant to replace a more in-depth financial analysis. There could be many reasons why you want to spend more than the rough estimate above. For instance if you wanted to add an amenity for the main house like a garage below the ADU, or you wanted to build a fancier unit with higher-end finishes knowing it would be more durable and have lower lifetime costs. Or perhaps you wanted to invest in super efficient systems or passive house construction to reduce energy usage, lowering the operational costs. Another reason to increase the up front investment would be to consider the resale value of the property in the future. Good design can often add 10% or more to the sales price of a property. Often going with the cheapest solution is not the best investment.

Questions to Ask Yourself When Considering an ADU as an Investment

• What are the long-term goals for the project?

• What is the local market for rental units? What is the average monthly rent for similar sized units in your location?

• How many bedrooms are ideal to maximize the rental price?
  (Typically we would see 2br units as the best option for investment ADUs)

• What do I need as a monthly ROI to make this project worth it?
  (You want it to be cashflow positive after any financing you take out to fund the project)

• What financing options are available and how much will I need to borrow?

• What is the maximum project budget for the ADU?
  (include all potential costs like design fees, engineering, surveys, permits, and construction, etc.)

• Who will manage the rental unit when it is complete?
  (There really is no such thing as truly passive income. Rental properties take time and effort to manage. Are you ready to take on this work on your own or do you want to hire a rental management company to handle it for you?)

In conclusion, ADUs can be an excellent investment for those looking for a passive income stream. They offer homeowners an opportunity to create additional space on their property while generating rental income.

To maximize the return on investment, homeowners should consider factors such as location, design, and potential rental income when deciding on an ADU project and crafting the project budget. It’s also important to be aware of local zoning and building regulations and work with experienced professionals such as designers, architects, contractors, and property managers to ensure a successful outcome.

While the initial investment may be high, the long-term benefits of owning an ADU are clear. Not only can they generate passive income, but they also increase the value of a property and can provide a multi-generational housing solution for families.

As the demand for affordable housing options continues to rise, ADUs will continue to be an attractive investment for homeowners looking to generate passive income while also contributing to their local communities. By taking advantage of the benefits of ADUs, homeowners can build a secure financial future for themselves and their families.

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This is a basement ADU design we worked on for a family in Portland, Oregon. They live in the main house above and rent this unit out on Airbnb and use it for friends and family. They make a nice income off the short term rental and it helps them cover the cost of their mortgage.

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ADU Design Guidelines: Maximizing Living Space Efficiency

Accessory Dwelling Units (ADUs) have gained significant attention as versatile living spaces that offer homeowners various benefits. Whether it's accommodating family members, generating rental income, or creating a home office, ADUs play a crucial role. In this comprehensive guide, we'll delve into the importance of thoughtful ADU design, with a specific focus on maximizing living space efficiency. We'll also highlight the advantages of using pre-designed ADU plans in simplifying the design process and saving valuable time.

The Role of Living Space in ADUs:

ADUs are all about providing functional living spaces. These spaces can encompass living rooms, bedrooms, and multipurpose areas, making them versatile and adaptable to different needs. Whether you're housing family members or renting out the ADU, the design of the living space plays a pivotal role in making the unit comfortable and appealing.

Local ADU Regulations and Zoning Requirements:

Before diving into ADU design, it's essential to understand local regulations and zoning requirements. These regulations can significantly impact the design of your living space. Factors such as setback requirements, size limitations, and zoning considerations must be taken into account to ensure compliance. Call your local building department or read your local ADU zoning code to learn about the restrictions in your area. Once you understand the overall size limitations you can then start considering how to divide the area of the ADU into adequate living spaces.

Advantages of Using Pre-Designed ADU Plans:

Designing an ADU can be a complex process, especially if you're starting from scratch. However, pre-designed ADU plans offer several advantages:

1. Streamlined Process: Pre-designed plans simplify the design process by providing a comprehensive blueprint. You won't need to spend extensive time on custom design, reducing project delays.

2. Expertise: These plans are crafted by experienced designers who understand the nuances of ADU design and construction. You can trust that the design is optimized for efficiency and functionality.

3. Efficiency: Pre-designed plans are carefully created to maximize every square foot of living space. This efficiency is essential for creating a comfortable and functional ADU.

Maximizing Living Space Efficiency:

Efficient space planning is key to ADU design. Consider the following strategies:

1. Open Floor Plans: Open layouts create a sense of spaciousness and flexibility. They're ideal for making the most of limited square footage.

2. Multifunctional Areas: Design living spaces that serve multiple purposes. For example, a fold-down bed can transform a living room into a bedroom.

3. Natural Light: Maximize natural light with large windows and strategically placed skylights. This not only brightens the space but also makes it feel more spacious.

4. Smart Storage: Incorporate built-in storage solutions to minimize clutter and maximize usable space.

5. Small Bedrooms: with smaller overall sizes for ADUs than main houses, it is important to allocate the right amount of space for each function. We recommend smaller bedrooms, and larger living rooms to give more space to the places you spend the most time while awake.

6. One Bathroom: WIth limited square footage it is better to have larger kitchens and living areas than to have multiple bathrooms. If you really must have a second bathroom, consider only a 1/2 bath.

ADA Compliance and Accessibility:

Creating ADU layouts that consider ADA guidelines is essential for creating accessible ADU living spaces that are ready for aging-in-place. This includes features like wider doorways, accessible bathrooms, and proper ramp access. These design considerations ensures that your ADU can accommodate a wide range of occupants comfortably and can set your ADU apart from others in your rental market.

Interior Finishes and Aesthetics:

Interior finishes play a crucial role in enhancing the overall appeal of your ADU living space. Consider these factors:

1. Materials: Choose durable and visually appealing materials that align with your design preferences.

2. Color Palettes: Use colors strategically to create a sense of continuity and spaciousness. We tend to stick to white, light gray, and neutral colors that can compliment a wide range of styles.

3. Design Styles: Select design styles that resonate with your tastes while maintaining a cohesive look. We think modern styles are in higher demand on rental markets and can demand higher rental rates.

Designing ADU living spaces that are both efficient and comfortable is a rewarding endeavor. By maximizing every square foot, ensuring ADA compliance, and carefully selecting interior finishes, you can create a space that serves your needs seamlessly. Consider the advantages of using pre-designed ADU plans, which streamline the design process and save valuable time. With thoughtful planning and the right resources, your ADU can become a functional and inviting living space that enhances your property's value and functionality.

How Long Does It Take To Build An ADU?

After cost, timeline is one of the most commonly asked questions by those looking to add an ADU to their property. It is important to understand the full project timeline and not just the construction phase as you begin to plan your project.

Projects can typically be broken down into 4 phases:

1. Planning and Research

2. Design

3. Permitting and Approvals

4. Construction

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The Planning and Research Phase: 4-8 weeks but potentially longer

This is vital to having a successful project as it is always easier and cheaper to make decisions on paper than when the project is under construction. It is also important to have the base research done to understand and accommodate the wide range of factors that will impact the project, from local rules and regulations, material supply availability, cost of materials and labor, interest rates and other financing information, to the specifics of the existing conditions of the property.

The length of time for this phase can vary from a few weeks to a few years depending on the client and how motivated they are to move forward with the project. When clients come to us to assist with this work, we typically estimate about 4 weeks to review the property, understand the local rules and regulations, and work with the client to develop a project budget and building program.

The ADU Design Phase: 3-6 months but sometimes up to a year

A common theme in all of these rough timeframe estimates will be that it depends on the client. Some people are quick to make decisions or just trust the design team to make decisions for them. Others want to be involved with the specifics of each decision throughout the project or may need a good amount of time to think through the options before settling on what they want to do.

We typically walk clients through a custom designed ADU process in 3-4 months. We feel that is a good balance of collaborating on the important decisions while our expert designers handle the details as we develop the permitting and construction drawings. You can then add on another month or two for the various other consultants that may need to be involved in the project. This would be consultants such as structural, mechanical, electrical, and plumbing engineers, landscape architects, arborists, civil engineers and other professionals. Most of these consultants will need the architectural design to be complete before they can carry out their work.

This is a place that starting with a pre-designed ADU plan can save significant time. If you are ok with one of the designs that are available for purchase, you can condense 3-4 months into just a couple of weeks. You would basically be skipping most of the design work and moving straight into engaging with consultants.

The Permitting and Approvals Phase: 1 month to 1 year, or more!

That range may seem crazy and we agree. This is one of the biggest frustrations homeowners, designers, and builders of ADUs have in the process. Each jurisdiction has their own rules and regulations and often there are conflicting rules between towns/cities, counties, and states. It is challenging to work through the various levels of regulation. Adding further frustration is how slow most building departments are at responding to questions as well as reviewing and approving submitted plan sets.

For some specific examples, we found that it took about 4-6 months on average to work through the permitting process in Portland, Oregon. Places in the Bay Area, like San Francisco, Berkeley, Oakland and others, the process could easily stretch out to one year or more. Seattle also has incredibly long review processes, probably falling somewhere between Portland and the Bay Area. Smaller towns or states with less regulation often work a lot faster. Places like Idaho or Texas can review and approve ADUs in just a few weeks or months, assuming the town you are building in allows ADUs, and the designs meet the local codes.

We highly recommend talking with your local building department as part of your Planning and Research phase, to get a realistic estimate of the permitting time you can expect.

The Construction Phase: 6-9 months

Once you receive approved plans from the permitting process you can break ground and start construction. From this point you could probably assume a 6-9 month construction timeframe. Of course this could vary based on your local climate, material supply, labor market, etc. Also, some contractors have larger crews and may move quicker. You may also chose to work with someone who will take their time and be a bit more meticulous with the construction details to deliver a higher quality final result. Sometimes taking longer is prefered.

Remember a few key things: starting construction in the spring is ideal as you will hopefully avoid delays due to winter climate conditions (freezing cold, snow and ice, and heavy rains can delay construction significantly). In the post covid world, material supply chain and skilled labor are significant challenges to overcome. There are significant delays in getting some key building materials, especially windows, that could significantly extend the construction timeframe.

The construction timeline for building an ADU can also vary based on the type of ADU. Converting a basement or attic, or even a garage could potentially be a bit quicker to complete vs doing a ground up construction. Working within an existing structure - assuming it is weather protected - may not face climate caused delays and also may reduce some of the work such as pouring foundations or doing significant framing.

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Overall ADU Timeline

If you are just beginning to consider adding an ADU a good safe estimate is it would take about 12-18 months from start to finish. That would include pre-design research, the architectural design phase, permitting approvals, and construction. Of course some jurisdictions - I’m look at you Bay Area - will probably throw some wrenches in the gears and take too long to review your project and issue permits, so it could take longer.

To bring this timeframe down you can consider strategies like starting with a pre-designed ADU, or even an prefabricated or modular ADU. It is also wise to plan for a a springtime construction start, and to hire your design team and general contractor well in advance so they can collaborate and plan for a successful construction process. The best time to start design would be late summer or early fall with the goal of starting construction the following spring or summer.

If you are starting a project and have any questions don’t hesitate to reach out. We are always happy to help you get on the right track. And if you want to cut down on your timeline and want to start with a pre-designed ADU plan check out our available designs by clicking the button below.

What Are The Design Phases For An ADU Project?

The design phases for an ADU (accessory dwelling unit) project will vary depending on the specific needs of the client, the goals of project, and the local regulations that apply. However, there are several common design phases that are typically involved in an ADU project. These phases may include:

1. Initial consultation and PreDesign:
   This is the first phase of the design process, during which the property owner meets with an architect or designer to discuss their needs and goals for the ADU. The architect or designer will assess the property and gather information about the project, including the size and location of the ADU, general design style ideas, the intended use of the unit, and any local regulations or requirements that apply.

2. Schematic Design:
   Here the designer works closely with the client to set the look and feel of the project and develop the conceptual floor plan, massing, and location on the site.

3. Design Development:
   In this phase, the architect or designer will begin developing the design for the ADU in a more detail. This may include sketching over the preliminary plans, refining the function of the plan, setting the overall dimensions, selecting materials, and making any necessary revisions to the design based on feedback from the property owner.

4. Construction Documents:
   Once the design for the ADU is finalized, the architect or designer will create detailed construction documents that specify the materials and construction methods to be used in the project. These documents will be used by the contractor to build the ADU.

5. Bidding and Construction:
   In this phase, the property owner, often with assistance or guidance from the design team, will solicit bids from contractors and select one to build the ADU. It is important to carefully compare bids to make sure they include the same assumptions rather than just selecting the lowest number. Once the permit is issued, the contractor will then begin the construction process, following the plans and specifications provided by the designers in the construction documents.

6. Construction Administration:
   During the construction phase, the architect or designer may be responsible for observing the construction process to confirm that the ADU is being built according to the plans and specifications. This may include reviewing progress, answering questions, supplying additional information or clarifications, and making any necessary changes to the plans.

Overall, the design phases for an ADU project will vary depending on the specific needs and goals of the project. By working with an experienced architect or designer, property owners can ensure that their ADU project is successful and meets all local regulations and requirements.

The design process is a vital part of the success of your project. Hiring an experienced designer can help guide you through the various steps needed to deliver a quality design that is on schedule and on budget. In order to save additional time and money, considering a pre-designed ADU plan could be a great way of shortening the design process by knowing that the design you chose has already been built successfully.

If you think a pre-designed ADU Plan is the right approach for you, check out our available designs ready to download today.

How To Make Your Short Term Rental Business A Success With An ADU

If you own a short-term rental property, or are thinking of starting one, whether it's an urban house, a backyard ADU, a casita, or a remote cabin in the woods, there are a few key things you need to know in order to run it successfully and profitably. Especially if you want to build an ADU as an investment and earn passive income.

1. Short Term Rental Rules and Regulations

   Understand the laws and regulations that apply to your property. Different areas have different rules regarding short-term rentals, including zoning laws, occupancy limits, and tax or licensure requirements. It's important to understand these laws and regulations in order to avoid any legal issues or fines. You should also be aware of any specific requirements or restrictions that may apply to your property, such as noise or parking restrictions. It is important to be familiar with these and work with your local jurisdiction to file any necessary paperwork and obtain the right business licenses so you don’t get shut down. Running a short term rental is running a business and most cities or states will consider your rental a business and expect you to follow their business rules.

2. Booking and Reservation Management and Fees

   Set up a system for booking and managing reservations. This may include setting up a custom website or listing your property on a popular platform like Airbnb or VRBO - although understand the fees they charge in order for you to be listed on their sites. You should also develop policies for booking and cancellation, as well as any additional fees or charges that you may want to add to the nightly rental fee. We have had past success on Airbnb, renting out an ADU we owned, and are currently building a small cabin we will rent out to friends and family through a custom booking site. We required a 2-night minimum in order to make it worth renting it out, we added a cleaning fee on top of the nightly rental amount (it is a single cleaning fee for the duration of the stay), and we also paid a percentage of the total fee to Airbnb.

3. Cleaning and Maintenance of the Short Term ADU Rental

   Develop a system for cleaning and maintaining the property. Keeping your property clean and well-maintained is essential for attracting guests and maintaining a good reputation. It is also a considerable amount of work, thus it is very important to plan ahead. Develop a system for cleaning and maintaining the property, including a schedule for regular deep cleaning, repairs, and maintenance. You may want to consider hiring a professional cleaning company or designating a staff member to handle some of these tasks. We set up a system with a professional cleaner and they would automatically get scheduled to clean after any reservation was made. It was a great way to reduce the amount of work we had to do to manage the rental and ensure the next guest had a great experience.

   Part of running a short term rental businesses is planning for and budgeting these costs. You may think that you are charging enough to turn a profit but then get hit by unexpected repair costs that eat through what you earned. Make sure you are setting your rental rates after planning for ongoing cleaning, maintenance, and repairs so you don’t get caught by surprise. It is also recommended that you set aside some of the profits each month into a separate account that you then use to pay for minor repairs or significant maintenance or upgrades. And track all of these expenses so you can deduct them when filing your annual taxes.

4. Guest Rental Policies and Procedures

   In order to ensure that your property is well-respected by guests, it's important to have clear policies and procedures in place and written in both the reservation platform and on site. These may include rules regarding noise, parties, smoking, and pets, as well as any other specific requirements or restrictions that you want to impose on how they use your space. Communicate these policies to your guests before their stay and make sure that they understand and agree to follow them. We also recommend having them printed and available on site as part of a guestbook or binder that they can access when needed. As each house, ADU, or cabin is unique, having a short “How To” guide with the basis for the house is a great way to make your guests feel at home. Give simple instructions on how to operate the heat and air conditioning, directions on where to find basics like extra toilet paper or towels, and a simple guide to activities on the property or in the surrounding area. If there are areas of the ADU or property you don’t want to them to use or there are specific places they should park, add these to the guide.

5. Provide Amenities and Supplies for Guests.

   To make your property as attractive and comfortable as possible, it's important to provide amenities and supplies for your guests. This may include linens, towels, and basic toiletries, as well as appliances and other amenities like a coffee maker, microwave, or television. You should also consider providing basic supplies like paper towels, trash bags, and cleaning supplies. The idea is to make the place as easy to use as possible while hopefully reducing cleaning and maintenance costs.

   We often would leave a bottle of wine along with a gift card to a local cafe for our guests if they booked more than a couple of nights. Small details like that can go a long way in differentiating your rental from others on the market and lead to better reviews. Remember, you guests are going to be some of your best marketers. Look for things you can do to make them smile, encourage them to write good reviews, or even design details that beg to be photographed and shared on social media.

6. Manage your Short Term Rental Finances and Pricing.

   To run a successful short-term rental property, you'll need to manage your finances and pricing carefully. This may include setting competitive rates, keeping an eye on competing rentals in your market, tracking your expenses and income, and keeping your property well-maintained to ensure that it stays in good condition and attracts guests. You should also be aware of any fees and tax implications of operating a short-term rental property and make sure that you are complying with all relevant laws and regulations. Although the potential income often sounds good, it is important to carefully estimate and plan for the costs you will incur running the business.

   Your Short Term Rental is not going to be purely passive income. It is a business and will take effort in order to be profitable. Make sure you develop a budget, track all expenses, and plan for bigger costs like repairs that only need to be done once in a while. As you develop a better sense of the costs of running the business, set your pricing and minimum nights stay to ensure that it is a profitable business.

7. How Much Income Can Renting an ADU On A Short Term Basis Generate?

   You can definitely make a decent living renting out an ADU on a short term basis. As you plan to embark on this endeavor think about how many vacant nights you will have, how many hours or days you need between stays to turn the place over, what seasons will have more demand, what pricing you should set at various times to attract enough reservations, and what your operating costs will be.

   For example, if you are only renting out the ADU on weekends - like we did - you only have about 100 nights a year you can rent out the place. And perhaps summer plus holiday weekends will have high demand but winter weekends may not be fully booked. Planning on renting 70 out of the 100 nights may be a good estimate to build a budget off of.

   If you are renting out the ADU for an average of $200/night you could generate $14,000 in revenue (You may charge higher rates, like $300/night in the busy season but lower rates in the off season). However, you would have to subtract cleaning services, supplies, and maintenance costs, plus any other expenses needed to run the rental.

   Alternatively, if you were renting it out full time and had a 70% occupancy rate that would give you 255 nights rented each year. At the same average nightly rate of $200 you could make around $51,000 in revenue. Of course this is just revenue and not profit, but still that could be a pretty decent income for a business that doesn’t take up your full time to manage.

8. Get Insurance for Your Short Term Rental and ADU

   Contact your current insurance provider to understand what coverage they provide for rental units on your property. Many home insurance policies won’t cover rentals so you probably will have to purchase supplemental insurance. Make sure that the policy you purchase will cover damages or accidents causes by guests and renters.

Overall, running a short-term rental property requires a combination of careful planning, business savvy , marketing strategy, and attention to detail. By understanding the laws and regulations that apply to your property, setting up a system for booking and managing reservations, developing a system for cleaning and maintaining the property, creating policies and procedures for guests, providing amenities and supplies, and managing your finances and pricing, you can successfully operate a short-term rental property and provide a comfortable and enjoyable experience for your guests and a steady income stream for you.

A short term rental business can take a lot of different shapes. If you already own a home and there is potential to add another unit, like a basement apartment, a converted garage, or a backyard guest house or ADU, that can be a great way to get your foot in the door and start earning rental income. One of reasons we think this is the best first step is that you already own the land so the startup costs can be much less than buying a new property. Not only that, adding an accessory dwelling unit can start generating monthly income now, but also increases your property value in the long run.

If you have any additional questions about adding an ADU as a rental unit on your property, or are thinking of building a small vacation home to rent out, feel free to reach out with any question or peruse our ready-made ADU plans that are downloadable today.

Building an ADU - What to know before you break ground

If you are considering building an ADU (accessory dwelling unit), there are several important things to consider before you break ground.

1. Research local regulations and requirements. ADU regulations and requirements can vary depending on the location of the property, so it is important to research and understand the specific regulations and requirements that apply to your property. This may include obtaining the necessary permits, meeting certain zoning and building code requirements, and following any other applicable regulations.

2. Determine the design of the ADU. The size and design of the ADU will depend on factors such as the size of the property, the intended use of the unit, and any local regulations or requirements. It may be helpful to work with a qualified professional, such as an architect or designer, to develop a plan that meets your needs and complies with local regulations. Alternatively, starting with a pre-designed ADU Plan can be an option to save time and money.

3. Consider the cost of construction and financing options. Building an ADU can be a significant investment, so it is important to consider the costs involved and determine how you will finance the construction. This may include securing a loan, using savings, or seeking financial assistance from a government program.

4. Choose a contractor. Once you have an ADU plan in place, you will need to choose a contractor to handle the construction of the ADU. It is important to research and compare contractors to ensure that you choose one that is qualified, experienced, and reputable.

5. Consider the ongoing maintenance and operating costs of the ADU. Once the ADU is built, you will need to consider the ongoing maintenance and operating costs of the unit. This may include costs such as utilities, property taxes, insurance, and repairs. It is wise to plan for this in advance and work with your designer or builder to select low-maintenance long-lasting materials and systems.

6. Set the timeline. Build and ADU takes a long time - months or even years depending on the size, complexity and location. Work with your general contractor to set a construction schedule and plan for any complexities and risks. Also plan some contingency as nothing works out exactly to plan.

7. Involve your designer throughout construction. Drawings are a guide for builders to follow but can never have every detail and situation covered. Having your designer involved in the construction process can help avoid errors, answer questions, work through challenges, and ultimately save money. It is always cheaper to make revisions on paper before things are built. When contractor’s have questions it is best to consult with your design team to help solve the problem. The design fees during construction will be much less than fixing things that were built incorrectly.

8. Hire a professional. Experienced designers and builders are more than worth their fees. They know how to get things done to a high quality and can guide you through the hundreds of decisions along the way. They also have relationships with other consultants that will be needed throughout the process. Although some people may be successful DIYing an ADU project, considering the amount of work it will take and time it will absorb, it is a great investment to hire professionals who can avoid mistakes, and keep the project on budget and on schedule.

Overall, building an ADU can be a rewarding investment, but it is important to carefully consider all of the factors involved before breaking ground. By researching local regulations, determining the size and design of the ADU, considering the costs involved, and planning for ongoing maintenance and operating costs, and hiring an expert team, you can ensure that your ADU project is successful.

5 Reasons ADUs Are A Good Investment

ADUs (accessory dwelling units) are becoming increasingly popular as a way to add additional living space to a property. These units, which are also sometimes called guest houses, laneway suites, granny flats, in-law units, or secondary units, are typically smaller than the primary residence on a property and are designed to be used as a separate living space.

There are many reasons why ADUs can be a good investment for property owners.

1. ADUs can provide additional rental income. By adding an ADU to your property, you can rent out the space to generate additional income. This can be especially useful for property owners who have a large amount of unused space on their property or who are looking for a way to supplement their income. The rental income can also help cover mortgage payments, making real estate purchases more attainable for a wider range of people.

2. ADUs can increase the value of your property. By adding additional living space, you are effectively increasing the overall square footage of your property, which can make it more valuable. This can be a particularly good investment for property owners who are planning to sell their property in the future, as the added value of the ADU can increase the overall value of the property.

3. ADUs can provide additional living space for family members or guests. This can be especially useful for aging parents or adult children who may need a place to live but do not want to be too far from their families or community. By providing a separate living space, ADUs can offer a level of independence and privacy for these individuals while still allowing them to be close to the rest of the family. It is also often a more affordable option than renting a room or apartment in a retirement community or assisted living facility.

4. ADUs can be a more affordable option for homeowners who want to add additional living space to their property. Because they are typically smaller than traditional homes, they can be less expensive to build and maintain. In addition, many cities and municipalities are now offering incentives and easing regulations to encourage the construction of ADUs, which can make them even more affordable. Further, since you don’t have to purchase the land, they are much more affordable than building a new home.

5. ADUs can be a sustainable housing option. By making use of existing resources and infrastructure, ADUs can be a more sustainable housing option than building new, standalone homes. In addition, ADUs can be built to be energy-efficient, which can help reduce the environmental impact of housing and save money on utility bills. Considering they are built on existing properties they also don’t require large infrastructure investments, which is a more sustainable development and saves money for town and city governments.

Overall, ADUs can be a good investment for property owners who are looking for additional rental income, want to increase the value of their property, need additional living space for family members or guests, or want to add living space in a cost-effective and sustainable manner.

Important ADU Investment Considerations

Of course, as with any investment, there are also some potential drawbacks to consider before building an ADU. One potential downside is that the construction process can be time-consuming and complex, especially if you are not familiar with local building codes and regulations. In addition, the cost of building an ADU can vary depending on factors such as the size of the unit, the materials used, and the location of the property. It is important to consult with a expert designer or builder as well as your local building department to better understand the full requirements of building an ADU.

Another potential downside is that the rental income from an ADU may not be enough to cover the costs of construction and maintenance. This is especially true if you are planning to use the ADU as a long-term rental property, as the costs of property management, repairs, and utilities can add up over time. It is highly recommended that you research the local rental market and compare what you could generate in rental income vss what the full construction and ongoing maintenance costs will be.

Despite these potential drawbacks, many property owners still find that the benefits of building an ADU outweigh the potential costs and challenges. By providing additional living space, increasing the value of your property, and offering potential rental income, ADUs can be a good investment for the right property owner.

If you are considering adding an ADU to your property as an investment, here is some guidance on how to begin:

Is an ADU a Good Investment?

Whether an ADU (accessory dwelling unit) is worth the investment will depend on a variety of factors, including your specific circumstances, the local real estate market, and the costs and benefits of building an ADU. In general, we have found that they have been great investments for most of our clients.

There are several potential benefits to building an ADU, including:

• ADUs Provide Rental Income:

  An ADU can provide a source of rental income for property owners. By adding an ADU to their property, property owners can rent out the space to generate additional income. This can be especially useful for property owners who have a large amount of unused space on their property or who are looking for a way to supplement their income and help pay down their mortgages.

• ADUs Increase Property Values:

  An ADU also increases the value of your property. By adding additional living space, property owners are effectively increasing the overall built square footage of their property, which can make it more valuable. This can be a particularly good investment for property owners who are planning to sell their property in the future, as the added value of the ADU can increase the sales price when they are ready to sell.

• ADUs Are A More Affordable Housing Option:

  ADUs also provide a more affordable housing option for homeowners who want to add additional living space to their property. Because they are typically smaller than traditional homes, ADUs can be less expensive to build and maintain. This can be especially appealing for homeowners who want to add a separate living space for family members but want to save money compared to purchasing a full house.

However, there are also several potential drawbacks to building an ADU, including:

• Initial ADU Cost:

  Building an ADU can be a significant investment, as it requires the purchase of materials, labor, and any necessary permits and fees. This initial cost can be a significant financial burden for some property owners and/or require construction loans or refinancing of the main house to cover those costs. It is important to balance the cost with potential income or increased property values. Overall, we see most detached ADUs starting at an investment of around $200,000 or more. Check to see if rental income in your area will offset the initial investment and make it worth pursuing. In most larger cities rent is high enough to make it a good investment despite the initial costs of ADU construction.

• Ongoing ADU Costs:

  In addition to the initial cost of building an ADU, there may also be ongoing lifecycle costs associated with maintaining the unit, such as utilities, insurance, and any necessary maintenance and repairs. These costs should be considered when evaluating the potential profitability of an ADU - balancing these costs with potential rental income.

• ADU Zoning and Legal Issues:

  Depending on the location of the property, there may be local zoning laws or other legal restrictions that impact the ability to build an ADU or what you can do with it (for instance many cities ban renting ADUs as short term rentals like Airbnb). It is important to research and understand these laws and regulations before embarking on an ADU project.

Overall, whether an ADU is worth the investment will depend on a variety of factors and should be carefully evaluated on a case-by-case basis. However, in our experience most ADUs are excellent investments for homeowners as the potential rental income plus the increase in property values more than offsets the upfront and lifecycle costs.

If you are considering adding an ADU as an investment and have any questions don’t hesitate to reach out. We love helping people embark on their ADU journeys. And if the goal for your ADU is as an investment, starting with a pre-designed ADU plan can help you get off on the right foot and reduce the development costs by saving on design fees and time.