I am working on refinance of my single family home with an recently developed ADU unit in the bay area that cost more than 300k to build and the appraiser only added 75k in value for the in law unit
The ADU unit is detached 2 bed/2bath/den/kitchen with its own address and pge meter.
Is that a norm in the bay area for ADU properites or the appraiser had no clue on what he is doing.
If this is true then practically I lost money and 2 years of my time to get the design/approval and construction done and it looks like adding ADU does not make any sense in the bay area.
interested and following. How much extra rent are you getting on the ADU?
rent is $2500
Found this really nice article on appraising adu with income capitalization approach. Till the appraisers realize this, ADU will be bad investments if not renting for long terms.
Why not have it appraised again? Surely you can find a better appraiser.
It is the bank that sent out the appraiser for refinance. I don't think they will approve using my own appraiser.
Just wanted to follow up on this thread as I also live in the Bay Area (Martinez) and am trying to finish my ADU. Was wanting to BRRRR the property, but not sure what it will get appraised for. Adu costing around $300k to build Do you guys know if there has been any changes on appraisals coming in higher on the price now that ADU are getting built more and are more common?
The appraiser will want to have a comp or comps with a similar ADU so as to demonstrate the premium being paid for said ADU. If there aren't ADU comps, then this is a big headache. I don't know your area and can't comment on what an ADU might be worth there. But compare houses similar to yours without ADU to houses similar to your with ADU and you can form your own opinion. BTW, don't go looking in superior areas for comps. Not gonna fly.
Also, ADU is kind of a generic term. I have seen a 100 SF "ADU" and much larger ones that would be a decent size house all by itself.
Hi everyone, 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...