ADU & Property Value

[Eddie Torres]

So I recently had a conversation with an appraiser and he basically confirmed what I already have heard regarding ADUs based on research. He said that basically any home that he appraises that has an ADU built on it, only gets an added appraised value of about $25,000. Anyone that knows how much it costs to build an ADU knows how absurd this is. They start at $150k and up. If you build an ADU for rental income, it's obviously nice to be cash flowing but it'd be great if it also would help increase your property value at a minimum the amount that you spent building the darn thing right? It's even more strange because most homes where I'm at are generally priced based on their square footage. For example: $800/sq ft x 1000 sq ft = $800,000. Since the ADU is finished livable space, why not factor it in as such? Makes no sense.

Anyway, he gave me some advice by saying if I were to build an ADU, as long as it's connected to the main house and the ADU is accessible with a door to the main house, then it would count towards the overall square footage for my home thus raising the value much more than a detached ADU would. I could still have a separate entrance for a potential Tennant but that connecting door is key (no pun).

He also said during the permitting process, don't permit it as an ADU and just treat it as a home addition. So what exactly is the difference? I know here in California there have been some new laws that help streamline the ADU building process like plan reviews in 60 days or less, waived impact fees, etc. So I know I'd lose those benefits. But what's the difference from the city's perspective? Would still need everything permitted like bathroom, kitchen etc. I'm sure the biggest difference will be the added cost but saving money from impact fees probably isn't as much of a benefit as it is to increase the property value right? Adding additional value of $200k is better than saving $20k in fees right?

Does anyone have any experience with this particular type of situation and can offer insight?

[Carlos Ptriawan]

Quote from @John Clarken:

Quote from @Carlos Ptriawan:

Quote from @John Clarken:

Wow, this is insane! My wife and I are starting the process of designing an ADU as we figured it was a no brainer for added rent and the potential property increase. It is absurd to think this would be appraised at a lessor value at being an addition over a detached ADU.

We are still planning to move forward as in the next year or two it will be for housing our extended family. I imagine after we will still be able to rent out the properties with a split fence line bringing in more cash. I also predict the right family will see the value as there is a need for multigeneration living which looks to be only increasing. This would require they cover the cost of the appraisal difference. 

 To address this, this is what you should do :
1. Add addition to the ADU so make it attached ADU, make sure it has the same specs with main roof,etc.
2. make sure there's good heating, insulation to the attached building and attached ADU
3. make sure you get permit and everything so it's legal when you sell it as one whole living space.

 Thanks for the reply. I'm going to work with the city and see if there is an option for a covered walk way to count at connected. I'll update once further in the process.

the city would not care, it's the appraisar that you should talk to.

by building detached ADU actually we solve city's problem but create problem for us lol