HI Biggerpocket Team!
I am about to break ground on the remodel of my home and am building an ADU over my garage for the same property.
My question is....is it worth spending the money to separate the utilities or just have one water, electric and gas meter?
During my search on BP it looks like some people don't believe they will get the ROI on spending the money to separate meter on any property...then there are some that do RUBS, submeter...ect.
ADU's are unique and wanted to see if anyone has done one and what their experience and thoughts were.
Any and all advice is appreciated.
First, is this legal to build this? Not my business, but you don't want to get shut down.
Since this is your home and it is a smaller unit, you don't have to separate them. If this was two independent units, I would.
Yes...everything is permitted and legal.....good looking out!
I will be living in the front house and the ADU will be built over the detached garage.
So you are saying you would not spend the money to separate the utilities?
I have a 4600 sf house on 20 acres that we built in 2004. We also built a large shop/garage (2500 sq. ft. but I have to reduce livable space to 1200), with a room that has a bathroom and kitchen, and upstairs area. All of that was done with permits, inspections, etc. However; somehow the County (Shasta) never entered the info on the septic permit for the garage into their system, and are wanting me to convert to an ADU. In order to do that I have had to redesign the septic, will pay 2000 for building permit (again) AND .. have to pay 8400 in impact fees. I will also put a seperate meter on the new ADU, which will cost 6000-10000.
Once complete, ADU's can have their own address, and are a legal unit. Therefore; if you want to rent it out, you will probably want a separate meter for utilities, otherwise you will have to calculate the usage and allot the amount owed for utilities. For you in San Diego it may not be a big deal, however; with PG&E, it's spendy.
Out of curiosity, what are your permit fees, impact fees, etc. to do the conversion?
I would not bother separating the utilities. But their electrical will be added to your bill.
@Ronnie S. I have personally separated water and electric utilities at every small MFR I've purchased - generally not through actual new utility-owned meters, but through sub-meters I purchase and install myself. I've found it much easier to charge people for their utility usage when they know (and I can prove) exactly how much they've used. The one place I tried RUBS was resisted by the tenants.
So long as you're planning to rent the ADU to someone, I don't see why it'd be the same. I'm doing several new construction homes right now that have ADUs built in and they're each getting sub-meters installed for water and electric. In my temperate market, not much gas gets used, so I haven't cared much about sub-metering that.
You're building on top of a garage - it'll be chump change to install your own submeters.
@Justin R. Thanks for the info....do you have any recommendations on the sub meters?
@Ronnie S. I use the bronze DLJ Meters (ala http://www.jerman.com/dljmeter.html) for water since mine are generally outside and mounted on the home (and not housed in a box).
For electric, talk to your electrician - used (or new) circular ones just like utilities use are readily available and are probably the cheapest option to wire for, purchase, and install since electricians are really used to them. They're also big and ugly. If it needs to be more discreet, you can find analog (https://goo.gl/DLQwFZ) or digital (http://a.co/gJbePoa) ones through a web search.
Since I plan to hold really long term, the hassle and labor to install is large, and I don't have to have to coordinate with tenants around utility-related work in the future, I buy the most durable meters I can find in hopes I don't need to touch them again.
@Justin R. Do you need to manually read those meters, or is there a remote option available? Those meters sound great if I can read them in a wireless manner, but would be a hassle to travel to properties once a month to get an accurate reading.
@Christian Mkpado There are remote readers that upload to internet, but far too expensive when just a few units.
I charge an estimated utilities each month, then read them every 6 months or so when I’m already at the property (or when a tenant moves out) and either charge or credit the difference between estimated and actual.
Pretty simple and economical.
I am a big proponent of separating utilities. By separating and passing along those costs to the tenants you automatically improve your ROI. With this move you also make your house MUCH more attractive to any potential buyers if you decide to sell. Look up the most recent podcast (i forget the number) where the guest talks about hidden ROI. This is one of them!
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