I just finished one. Converted my garage to a 1bed 1bath in Atwater and the new tenant is signing the lease today.
A lot to type out for the whole process, happy to grab a coffee and go over all of it with you. I think there's a lot of income to be made by doing it in LA.
I did the design work and had a structural engineer draw up those plans. I went a little overboard vaulting the ceilings, adding sqft and some extras but I think the area calls for it and it makes a smaller space feel huge.
Specific to the ADU......
Property is on flat land so no hillside regs.
It's within .5 miles of public transportation so we're able to convert the garage and not have to put in covered parking.
Design was a little tricky since the original structure is non-conforming to the setbacks.
A huge issue people have been running into is changing more than 50% of the structure. The city will call it all new and then everything would have to be within the newer setback regs.
Gas and power are on new meters. Water is subbed. (utilities were the longest process so jump on them early)
As for the first part of your question, you might think that you will save some good money going with an unlicensed guy, but that almost always comes back to bite you. There are a lot of bad things that can happen with an unlicensed guy (I’m not calling him an unlicensed contractor on purpose, he’s not a contractor). Here are a few of the negative highlights:
In the state of California it is braking the law for him to do any work for someone where the labor and materials is over $500.
You are personally liable for the workmen’s Comp and general liability for him and all of his guys, the law looks at you like his employer.
Because he can’t legally contract in the state you will have no recourse for shotty work or if he just walks.
There are obviously hoops that you have to jump through and tests you have to take and work experience you have to document, but it is not that difficult to get a license and do it all on the up and up. It’s a HUGE red flag, in my opinion, when somebody doesn’t have a license if they any good at construction and take pride in their work. There must be a reason....
I want to put a factory-made ADU in my backyard, but was wondering about costs, and how to go about finding the best people. I basically would only get the model delivered, and would have to do the craning, foundation, and utilities myself. I have tried to call a few contractors but they all want to do the design-build themselves for the biggest profit. I've been told that so many people currently want ADU's that something like my project isn't as interesting to them.
Also what are your thoughts on how the ADU space has changed after the passing of SB-13, I read that they can no longer charge impact fees, therefore wouldn't the permitting fees go way down?
Depending on what, or who, you go with for the prefabricate ADUs it can cost about the same as a stick built, ground up ADU. I would get solid numbers for both of you haven't. Just my two ¢. Good luck
I converted a hobby room to an ADU, but I haven't done a prefab. However I have gone to a few meetups and spoke with several prefab companies. There is one in particular that I liked and could connect you with.
In terms of the regulatory changes and the impact on total project cost, I think it’ll be project dependent. Permit costs go down, but other costs will go up.
@Matthew Forrest a connection with whatever prefab company you liked would be great. Also, how did you find out about these meetups, and are there any upcoming?
LA Water and Power will not allow an SDU that is underneath-or close to being underneath-power lines. You'll have to google it for exact specs.
Where I live SoCal Edison is provider and it is not an issue.
I wouldn't do anything until I found out this situation; it's been a heartbreaker for some.
It is not that they "Don't allow it" it is that they have certain set back rules for the utility easements that exist on a property when there are overhead power lines in the backyard. If you stay outside the setback, you are fine, but if you wish to be closer, then there is a process with LADWP you must go through to get it inspected and approved. This process was taking waaaaay to long but they have recently been moving much faster on these requests. I had one that took about 4.5 months just to have some LADWP guy walk on the property, look at it for about 45 seconds and then state it will be approved. Totally silly but that is what was happening. Now they are coming out within 2 months (my latest info anyways).
Not sure if a standard stick built on site is more or less than a prefab but either way, you will need to pull the necessary permits, get your plans together and do the foundation and utilities with a contractor.
@Alicia Johnson check with the city again, current state law should be in your favor and allow conversion without demo, I'm in the process of converting a garage in Inglewood thats about 4-5 ft from the property line.
@Will Barnard what are the estimated cost for the separate electric meter? People keep telling me its not worth it, however I don't have an understanding of the cost to make an informed decision. The primary unit has an AC and the ADU will have a mini split so utility cost can definitely be a burden.
@Will Barnard what are the estimated cost for the separate electric meter? People keep telling me its not worth it, however I don't have an understanding of the cost to make an informed decision. The primary unit has an AC and the ADU will have a mini split so utility cost can definitely be a burden.
ADUs are one of the smallest real estate investments to make in a high market area. Don’t think you can find $200k 2 bedroom house with yard & parking in any major market. May have to review your basic savings & investing strategies in other forums.
ADUs are one of the smallest real estate investments to make in a high market area. Don’t think you can find $200k 2 bedroom house with yard & parking in any major market. May have to review your basic savings & investing strategies in other forums.
This is a very good and valid point. Particularly in CA where prices are very high for the dirt AND the improvements, and per the new assembly bills and senate bill that took effect this year, you can not find a better low cost (relative to buying an entire property as a rental) investment opportunity than converting a garage to an ADU or building a new construction ADU.
I have 3 ongoing ADU projects for clients of mine and I am not even marketing for them.
Some of the concerns and debates over ADU build outs is the value given by an appraisal afterwards which is certainly a valid point of contention, however, if you are looking at it from a long term perspective, your cash flow will likely pay for it in 10 years or less and good luck finding that kind of RE investment return without massive risk here in CA! Many of the numbers I have crunched show possibilities of investment capital returned in 6 years.
Currently I have a 745 SF total ADU project where my client has an existing 350sf detached garage at his rental house and we are adding on to it to create the <750sf unit which would eliminate any impact fees paid to the city per the new ADU laws. We expect this project to be under $150k including all architectural, structural, driveway, and utility connections. It will be a 2+1 with full kitchen, laundry, and linen closet with one of the bedrooms having a walk in closet. I show rental values for this unit to be at $2.2k monthly rent. That's over $26k in gross rents with minimal expenses since he is already managing the main house rental as it is. After factoring in monthly utility costs, repairs, vacancy factor, and operating expenses, he should clear around $1600 monthly. That would return his capital in 7.8 years WITHOUT any rent increases over time and we surely know that Los Angeles will likely have that upcoming.
Just one of many examples of how to increase your rental income with a low capital investment and the returns above do not factor in the advantage of leverage either!
I just purchased a home w/ 5% down and now working on a new build ADU. I am financing the project with my own cash. My questions is: does anyone know of a strategy on how to finance the ADU in this scenario with debt?
I did some upgrades on the home which should bring the value up, in addition to the ADU. I'm expecting to have 15-20% equity when all is said and done, but of course that will vary depending how appraisers are valuing the ADU. Will lenders consider a cash out refi back down to 5% equity? Or is that not even a possibility?
Will Barnard: The projects you have going are rare and sounds like you have a handle on a multiple projects. You run a professional ship. What are the top 3 biggest challenges & threats to your ADU projects. I find City does not want to comply and even with rules on builders side, there no money to fight . 2nd: any grade, flood, fire or density is another issue city will wave the flag on. 3rd: finding builders that have confidence to work in confine yard, things out of the ordinary.
I had a project at a small house on 15k sqft space with pool. Removing the pool may cause ground issues to the house and or neighborhood but it wasn't proven but vendors speculated things could be a problem. . Another project had a detached garage taking up 50x40' and we got permission from neighbor to tear down the fence, we use their driveway to gain access, and we replace the fence with new plants and trees and even offered to put in sprinklers to their system for their side. The contractors didn't like the project was dependent on neighbor . Good contractors we talk to prob have easier projects that are more profitable than ADU I guess
Will Barnard: The projects you have going are rare and sounds like you have a handle on a multiple projects. You run a professional ship. What are the top 3 biggest challenges & threats to your ADU projects. I find City does not want to comply and even with rules on builders side, there no money to fight . 2nd: any grade, flood, fire or density is another issue city will wave the flag on. 3rd: finding builders that have confidence to work in confine yard, things out of the ordinary.
I had a project at a small house on 15k sqft space with pool. Removing the pool may cause ground issues to the house and or neighborhood but it wasn't proven but vendors speculated things could be a problem. . Another project had a detached garage taking up 50x40' and we got permission from neighbor to tear down the fence, we use their driveway to gain access, and we replace the fence with new plants and trees and even offered to put in sprinklers to their system for their side. The contractors didn't like the project was dependent on neighbor . Good contractors we talk to prob have easier projects that are more profitable than ADU I guess
I would not classify these projects as "rare", on the contrary, common. I can't speak for all counties/cities in CA, but LA Department of Building and Safety has complied with CA state laws regarding ADU's and we have not run into any trouble with them. Any city attempting to limit or reduce a homeowner's ability to build an ADU that is in compliance with state law would open themselves up to a law suit from the STATE of CA, not just the homeowner. I have yet to hear of anything like that thus far this year.
Agree, having a good contractor who can think outside the box to access difficult locations, etc is certainly a plus, not all contractors are equal!
I am interested in learning more about adding prefab house as ADU. Can you share more info pls? What's the additional cost in terms of installation other than the cost of the house itself. Thanks!
@Sammie Xiao - Hi Sammie, the costs can vary tremendously, just like any kind of new construction. Below are 3 sites that can provide additional information.
Instead of starting a new thread, figured I'd tack onto this one. I'm in the process of a garage -> ADU conversion (permits issued) and work has started. This is probably an oversight on my part but the GC mentioned utility connections aren't included - which is fine. My question is this a separate permit that needs to be submitted for sewage connection, water and electrical (ADU will be fully electric so no gas)? The original assumption was that for CO to be issued on the ADU that utilities would have to be connected first. Thanks!