ADU Zoning and House Hacking

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

9y

@Jeff B. many cities now encourage ADUs Portlandia for one.. they look at it as a form of affordable housing and of course PDX is all about cramming people into density and now So cal sprawl.

I have 3 homes I am building this summer all three will have ADU's above the garage with full kitchen

when I told the planner at the city I have alley access and I want to put ADU above detached garage you could just see her light up.. its planner nirvana..

ADUs in our area will rent for 1000 to 1,500.... I plan to sell these 2k sq ft homes with the additional adu in the 650k range.. so for the home owner they can defer almost half their mortgage payment sweet deal for all...

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Seth Borman

Rental Property Investor · Phoenix, AZ · Member since 2016 · 553 posts · 314 votes

9y

ADUs, by definition, have a kitchen. There is no replacement for looking up the city zoning code and seeing what it says. Key differences from a duplex often include the use of a side sewer, the lack of an individual meter for utilities, and the disparity in permitted size. ADUs are typically not allowed with MF properties.

Bill S.Pro Member

Moderator

Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes

9y

@Bryan Tench so what City is the property located in? Find their regs and see what they say. Base on what you wrote I'm a bit confused. It almost sounds like you would be making 3 units. One Unit on the main floor and 2 units in the basement. In the basement there would be one unit to live in and one unit to AirBnB. Is that correct? ADU's do have kitchens so you can do the mods to the basement so you would have one kitchen there. I seriously doubt they would allow 3 kitchens. It's my understanding that you can AirBnB a bedroom and bathroom in a unit that you live in (one shared or unshared kitchen). It depends on the area whether you could rent and AirBnB parts of the property at the same time. Perhaps @James Carlton can weigh in on that.

Bryan Tench

OP

Englewood, CO · Member since 2016 · 4 posts · 1 vote

9y

Thanks for all the feedback.

@Jeff B. I definitely plan to give the city a call on Monday but unfortunately offers are due by the end today.

@Jay Hinrichs I agree ADUs definitely offer a great opportunity and I think is the most feasible in this market as multi-plex prices are through the roof.

@Bill S. @Seth Borman, This property is in Lakewood, CO 80227 and is zoned R-1-6. City regulation states that for a SFH an ADU shall not exceed 700 sqft and can only have 1bd. I do not believe the basement on this property will comply with those regulations as an ADU. Since we intend to be the occupants for that space we don't need a full kitchen, essentially we just need a sink so what distinguishes an ADU from say adding a Wet Bar to a basement? If this strategy in not feasible due to the regulations, how likely is it that I could get a variance or the property re-zoned as a MF?

As far as the AirBnB, I do not intend to add another kitchen to that room, the intention was to rent it out as a 1bd/1ba room. Based on the city codes it does not seems like short term rentals are strictly regulated, essentially it just cant be rented out for more than 120d a year.

Bill S.Pro Member

Moderator

Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes

9y

@Bryan Tench so typically an ADU is a fully contained unit (bed bath kitchen etc) so a 2nd kitchen in the property would be acceptable. From what you posted. The max sqft of that unit would be 700 so if the basement was say 1,200 sq ft then they would not allow that to be the ADU. You would have to see how they would treat something like a common laundry space or other common space. I think the purpose of the code was to prevent people from building a full duplex. You should also read the code about ADUs and make sure basement units are acceptable. I think the challenge for you would be to get your space and the space for the AirBnB all within the 700 sqft of the ADU. You have to know that AirBnB laws are coming to a municipality near you. Don't count on that income over the long haul.

Bryan Tench

OP

Englewood, CO · Member since 2016 · 4 posts · 1 vote

9y

Thanks for all the help everyone, unfortunately this one didn't work out. Turned out there were multiple offers over asking at which point the numbers no longer worked. I definitely like the potential of an ADU so I'll have to do some more digging into the Denver Metro zoning codes.

Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes

9y

@Bryan Tench. Interesting post. I love the idea. (I actually put in an offer for a buyer this weekend for a SFH in Englewood with a basement in-law suite.) Others have offered some great insights about zoning issues, so I won't wade into that area.

I will reiterate what @Bill S. said about Airbnb laws. While the Lakewood code doesn't currently address short-term rentals like Airbnb and VRBO, in all likelihood it will soon. Many cities are following Denver's lead here. Aurora just passed a similar law. Edgewater just put a moratorium on STRs while they figure it out. Arvada doesn't address it in their code, but their planning department director has issued a letter opining that STRs are not allowed. Castle Pines city attorney has issued a similar letter. This is all to say, if rules aren't promulgated yet in your city, they will be soon.

So ... how are you to plan? I look to Aurora as an example of what might come. Officials there said they looked at Denver's new law when drafting their ordinance. The end result was that STRs are allowed but only in your primary residence. I'm guessing this primary residence rule will become the norm. So this would allow you to do what you proposed (at least under the STR rules; again, not sure about zoning.) But a big caution: If you plan to move on to other house-hacking opportunities or just move into another place, then you might not be allowed to rent one unit as an STR, as it would no longer be your primary residence. So be sure that when you run the numbers that it would still work if that potential STR were a long-term rental ... because some day it might be.

Congrats on getting out there. Good luck!

3 Reply

Denver, CO · Member since 2012 · 268 posts · 164 votes

9y

QUESTION: I just found out one of my properties is zoned to build a NON-owner occupied ADU of the maximum size of 864 sq ft. I would like to put a 3 car garage under it and maximize the size of the ADU. Since this is quite a set size, by the city, does anyone know where I could get house plans for that? I know some architects are charging full development fees and of course, the plans are always the same since the size is regulated. Just wondered if anyone has plans for this configuration or more information on history of doing this?

Denver, CO · Member since 2012 · 268 posts · 164 votes

9y

The zoning is E-TU-C Lot size 6050

Seth Borman

Rental Property Investor · Phoenix, AZ · Member since 2016 · 553 posts · 314 votes

9y

@Kelly Sennholz search using the term "carriage house."

Denver, CO · Member since 2012 · 268 posts · 164 votes

9y

THANKS!!! It was very similar but appreciate the assistance!

Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes

9y

@Kelly Sennholz Just saw this post. I love the carriage house idea. In Denver, it's one of the few ways you can rent full-time on Airbnb with a short-term rental. I'm a bit of a broken record trying to get some of my investors (and regular buyers) to look at homes with a basement apartment or carriage house. With Airbnb, it's house-hacking on steroids.

PM me if you haven't already found someone. I have a few people who have helped build some garage spaces. They might help out or know who to turn to. Cheers!

Denver, CO · Member since 2012 · 268 posts · 164 votes

9y

Thanks, James. I found out that this lot of good for "Tandem House" which allows more square footage and the ability to divide the lot and sell just one in the future. More information on that is greatly appreciated. I seek a builder who can do it!!

Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes

9y

Hey @Kelly Sennholz

I just responded to this on your other post about tandem houses . Cheers!

Bill S.Pro Member

Moderator

Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes

9y

@Kelly Sennholz throw some local names in your post and those of us with keyword alerts will see it and can comment sooner.

Denver, CO · Member since 2012 · 268 posts · 164 votes

9y

OK, Thanks, Bill!!

SFR Investor · Denver, CO · Member since 2009 · 184 posts · 55 votes

9y

The ADU zoning districts are pretty rare in Denver, but you can build them in any TU zone.

But in the TU zones, you would be much better off building a Tandem House because they can be much larger and can be sold separately, like duplex units. Read more about ADUs and Tandems at:

https://www.denvergov.org/content/dam/denvergov/Po...

If you split the lot and had separate legal descriptions for each house, however, you would not be allowed to do Airbnb on either house. * So save that step until you are ready to sell.

*Just my interpretation of the current laws and policies, YMMV.

SFR Investor · Denver, CO · Member since 2009 · 184 posts · 55 votes

9y

@Bill S. Attached or basement "ADUs" are never allowed because they create a defacto duplex, and you must have TU zoning for that.

SFR Investor · Denver, CO · Member since 2009 · 184 posts · 55 votes

9y

BTW @Bryan Tench I just put my duplex up for sale at 2145 S Bellaire for $390k. It's perfect for the strategy outlined in your first post. You would want to install the code-mandatory egress window in that basement bedroom ($3500)

SFR Investor · Denver, CO · Member since 2009 · 184 posts · 55 votes

9y

BTW @Bryan Tench I just put my duplex up for sale at 2145 S Bellaire for $390k. It's perfect for the strategy outlined in your first post. You would want to install the code-mandatory egress window in that basement bedroom ($3500)

Sorry about the double post.

Bill S.Pro Member

Moderator

Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes

9y

@Kevin Dickson so ADUs are allowed within the SU zoning use when the designation of the zone lot size is followed by the number 1 or 2. An ADU maybe a basement unit.

Per the City web site

Accessory Dwelling Unit (ADU) - Separate residence built within or detached from the main home, designed or configured to be used as a separate dwelling unit and has been established by permit. Usually requires owner to live in one of the units.

The strict requirement is that one of the units on the property is owner occupied. This is the link that describes the designations allowing for an ADU within the single unit zone lots. @James Carlson I think you asked about this at one point. I think that link holds the answer to your question if you have not already figured it out.

Of course this only applies to Denver. Other municipalities have their own rules.

Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes

9y

Thanks for notifying me of this, @Bill S. @Kevin Dickson - the U-RH zoning allows it as well, but again, there are better uses for that land than just a simple carriage house. I was interested in what you were saying about the basements. So I've got clients coming to me all the time wanting to do Airbnb. You can only operate a short-term rental in Denver in your primary residence. I help them find SFHs with basement apartments (or existing carriage houses) where they can legally rent on Airbnb full-time.

Are you saying if someone found a home with a nice-sized basement and wanted to cut out a separate entrance and put in a kitchen down there, that that's not allowed in anything other than the TU zoning?

Just as a gripe, when will the city open up the zoning code to allow to more areas to build new ADUs. All this griping about affordable housing, and at least one good tool has been taken completely off the table.

Bryan Tench

OP

Englewood, CO · Member since 2016 · 4 posts · 1 vote

9y

Thanks for all the inputs on this one. The more research I've done, Denver's zoning code is laid out fairly well on ADUs and STRs but the other metro cities are much less clear so I've found it much easier to call the city directly on a case-by-case basis rather than trying to decipher the code. I'll echo @James Carlson's gripe, I hope that the metro area starts relaxing the ADU restrictions to help with the affordability and supply issues soon. It seems that eventually they will need to adopt the ADU tolerance of other large metro areas.

@Kevin Dickson, I actually do have your property flagged so I'll definitely take a closur look at it, run the numbers and see if it'll work with my strategy/goals.

Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes

9y

@Kevin Dickson, @Bill S.

Just circling back on this. Do either of you know whether the city of Denver will permit a kitchen in the basement? Will they permit you digging down and cutting out a new separate entrance? Does it make a difference if the place is zoned U-SU vs. U-TU?