ADU Appraisal California

[David Maldonado]

Hey everyone,

So from my understanding of how a detached ADU is appraised, is by comparing similar properties with detached ADUs that have recently sold in the area, but there aren't much homes with detached ADUs to use for comps since this is still fairly new.

On the other hand, would an attached ADU be appraised differently? I bought my home in late 2018 for 360k and then converted my garage into a 488 sq ft ADU. I recently got an appraisal letter from the county appraiser and my property is now valued at 418k. Not bad, considering I spent 35k to convert it. I got in touch with the building inspector and she sent me info on how the city views ADUs. Attached ADUs are considered "additions" thus add square footage to the main house, but detached ADUs do not.

Would an Appraisal done for refinance purposes count an attached ADU square footage together with the main house?

Just coming up with Ideas on how to pull out everything I put in on an ADU to keep on repeating the process since there is not much financing options for funding ADUs besides using HELOCS or Personal loans.

[Chen Zhou]

@David Maldonado

Wanted to share with you a great way to tap into the equity built from your ADU.

The problem today: most appraisers used by traditional lenders would give ADU square footage a second-class treatment than the main house (as some of your mentioned above) since there aren't that many comps and they're trying to be conservative.

However, you can consider taking out a HELOC/doing cash-out refi through Figure.com (HELOC up to $250k, Cash-out refi up to $1M). I just took out a 30-year fixed-rate HELOC through Figure from my San Jose property that has an ADU on it. Unlike the other lenders, Figure.com does automatic appraisal (without a human involved) based on public data and they treat ADU square footage the same as the main house square footage. Because their generous appraisal value, I was able to take out all the cash I invested into the ADU (plus some more). The whole process only took 2 weeks and I'm really happy about it. In fact, you can check your property's appraised value by simply filing out the questions on their website. If you have an ADU on your property, it's super easy to find out approximately how much you can take out through just a few clicks with only a soft credit pull...

A side note: the founder of Figure.com Mike Cagney also founded Sofi and they got pretty some impressive investors. I think they really did a great job simplifying the process and removing all the inefficiencies in mortgage industry today...