New to ADU - Checklist or Cheat Sheet?

Question

Does anyone have experience with ADU's (accessory dwelling units) in any market, but particularly Cincinnati? I've had a couple OOS investors ask about ADU potential in our market... not sure what hurdles there might be with the city (permitting, zoning, or otherwise).

Anyone have a cheat sheet or checklist for covering your ADU bases? Any/all advice welcome.

Zachary Elliott · Answer

If anyone has info on this, I'd love to see it as well. I think it's probably less common here but I've often wondered about how difficult it would be to convert a detached garage, etc. on a property from a legal standpoint.

Dan H. · Answer

In southern CA, even garage conversion ADU additions are typically costing more than the value added.  Possibly already permitted outbuildings that already have plumbing such as workshops, offices, etc might be able to be converted to an ADU at a cost that does not result in the cost being more than the value added.

Building an ADU is a lot of work and can be a slow process.   Most take near a year in southern Ca, but you hear of exceptions in both directions on that timeline.

What some developers are doing here is leveraging the affordability issue and getting permission to build additional ADUs by designating some as affordable or semi affordable units.  The neighbors hate it.  The pro development and affordable housing advocates use the term NIMBY, but I suspect it is the rare person that buys in a single family zoned area that would be thrilled to have 17 units (qp16 additional units added) in the lot next to them.

My initial protege was the land source on this effort.  He made a lot of money and the developer is the “hated” villain but my initial protege knew what the land was going to be used for.  If it was not him sourcing the land, it would be someone else.   The issue is the laws should not allow this.

https://www.cbs8.com/article/news/local/working-for-you/new-...

Adding a single small unit is expensive residential development.  Adding 16 small units can be very profitable, with enough profit for all those involved.  My buddy sold for ~$500k over its existing use value and no contingencies and did not even convey existing tenant’s deposit.  It was easy money (he had a partner so my buddy ended up with 50%).  The value add was recognizing what the current regulations could allow the land to be used for (basically recognizing current land use did not optimize the value).

Good luck

Kristi Kandel · Answer

@Kate Zieverink McMinn we just hosted a webinar with a friend in Orange County, CA that used to be a public works engineer. However, after he saw the quantity of ADU applications come across his desk to plan check he went out and started his own consulting company. (YAY - I love people becoming biz owners).    While we focused on his market for ADUs he did share a lot of valuable information that is transferrable to any market. Happy to share the video and his presentation if you shoot me a DM.

Generally - just reach out to the planning/zoning dept direct and ask them those exact questions. Each municipality is different and what's allowed will be based on your exact zoning. Utilities are OFTEN overlooked so reach out to power, telecom, gas (or go all electric), water, and sewer to make sure you understand what it would take to get separately metered services from the primary house. You could potentially tap into your existing utilities but there are other considerations that might make it worth separate utility laterals and services.

Reach out to the contractors currently building ADUs in your market. They are going to have the real costs and lessons learned that will save you lots of time and potentially headaches.

Tyler Munroe · Answer

@Dan H. Good points. I think new builds don't really work from an ROI standpoint, but if you can find properties that have easy ADU conversions then the value might be there.

I'm in MA and we just made ADUs legal by right, so I'm looking into the best ways to add value using them. A lot of our housing stock here has finished basements or in-law suites, so with something like that you can generate significant rental income for an inexpensive conversion.

Dan H. · Answer

Question: why would one choose to build an ADU when existing structures sell for less than the cost of development?

Even in HCOL areas, adding an ADU typically does not make sense because developing a single small unit is the most expensive residential development that exists.

Adding an ADU is a lot of work (probably more than a brrrr but with worse return), has poor financing options, typically adds less value than the cost of the addition, and detracts something from the primary structure even if it is just yard and privacy.

Good luck

Kate Zieverink McMinn · Answer

Trying to bring this back to the top. Feel like there's more going on in ADU land. Still curious. Whatcha got?

New to ADU - Checklist or Cheat Sheet?

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