Financing an ADU in Oakland, CA

11 Replies

Hi! I'm finally, after months and months of waiting, coming to the end stage of receiving permits for a 1000 sqft, 3br/2ba, detached ADU in deep east oakland. As I go through this process, as a total newbie, i'm starting to realize I'm not equipped to understand what the the somewhat classic lending scenario look like for this kind of work. I'd fully anticipate the cost of this project to be around 300k all-in and I'm keen to understand how people are financing accessory dwelling units around the country, in California, and certainly in the bay area.

I'm also very keen to understand how these ADUs are priced in a refi scenario. It's super unclear what an ADU is worth, but in my case the ADU will likely be built to a higher standard than the main structure...

Looking forward to getting the ball moving and definitely looking forward to understanding how people finance these kinds of projects.

If you have the equity, you should consider taking a HELOC out on the main house to fund the construction. Otherwise, there are a couple of pretty good products from US Bank that can help you finance the construction of the ADU. Try reaching out to Karyn Jones at US Bank, I can send you her contact info, just PM me.

How much did you pay in impact fees for going above the 750 sq ft ADU size? I've heard the Impact Fees are pretty hefty but proportional to the number of sq ft over 750.

Hi Pavan, 

A lot of my ADU customers in the Bay Area are taking HELOCs, Cash Out Refis, or construction loans. I can pass along our Mortgage Consultant's information that loans on these projects for them if you'd like. Have you looked into manufactured homes vs custom stick-built?

From experience and research, ADUs will increase your property value by roughly 30% right away. This will then lead to an increase in appreciation over time. I have created a spreadsheet that will run through 30 years of calculations for you if you’re interested.

300k for a 1000 sqft 3/2 is a good estimate. If you want me to give you a bid on your project I’d love to help, I live in the east bay. We’ve been doing 1000 sqft ADUs <300k. 

Best of luck! 

@Namit Raisurana  I have done tours through the manufactured home factories where all of the manufacture home dealers get their ADUs from and they are top notch. To be honest most of them are nicer than most main homes. The quality of these units are held to a higher standard than stick-built and done for cheaper. Similar to building a car in an assembly line vs from the ground up. And whether you choose stick-built or manufactured, the foundational/utility work and pricing is the same.

totally agree with you. Do you know if there is a way i can tour any MH facility close to bay area? also, is there a way for me to buy from directly and hire a GC to take care of the site work?
Originally posted by @Brandon Hutslar :

Hi Pavan, 

A lot of my ADU customers in the Bay Area are taking HELOCs, Cash Out Refis, or construction loans. I can pass along our Mortgage Consultant's information that loans on these projects for them if you'd like. Have you looked into manufactured homes vs custom stick-built?

From experience and research, ADUs will increase your property value by roughly 30% right away. This will then lead to an increase in appreciation over time. I have created a spreadsheet that will run through 30 years of calculations for you if you’re interested.

300k for a 1000 sqft 3/2 is a good estimate. If you want me to give you a bid on your project I’d love to help, I live in the east bay. We’ve been doing 1000 sqft ADUs <300k. 

Best of luck! 

I'd love to chat with your consultants. As it stands, we're using PMHI (https://www.pmhi.com/) to get all of our panels (including set-in windows, but we're otherwise on the hook for everything else from standing these panels up to trenching our utilities and roofing our house. Not a trivial set of activities, but we've seen estimates to get this entire project done for well under 200k (https://www.caprecut.com/image...). The gentleman that runs this with his son are genuinely fantastic people -- the father passed away unfortunately, genuine saint -- but his son and I are continuing to push things forward.

It turns out the city here in Oakland is starting their plan review, so we're about 6 weeks away from permits, and we're likely 2 months away from panels delivered, so there is a bit of time before we have to execute on this project. My hope is to have contractors ready to roll on day 1 and to have financing readied up as well.