Is it worth to add rentable in-law quarter/ADU in Dublin CA (West Dublin) house, which costing ~85K or so to build for 300 sq. ft. built up area for the in-law quarter?
How much rent it would bring in and is it easily rentable?
Does it add value to property in the same amount as main house for per sq. ft. price or lesser? i.e. if house is being sold at $600/sq.ft., does the ADU too priced at the same value?
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
7y
I’d talk to a lot of local real estate agents SPECIALIZING in Dublin and nearby cities. I’m not sure if it’ll easily add value at $PSF of main house, or if it’ll be seen as a white elephant. It’s probably appealing to multigenerational families. Of course you’ll be able to rent the unit out for extra income (check Craigslist for similar rentals.) But another option is to add that sq footage to the main home via internal staircase, which should add value directly to the main home.
Do some local research, and post back here what you find out!
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
7y
I’d talk to a lot of local real estate agents SPECIALIZING in Dublin and nearby cities. I’m not sure if it’ll easily add value at $PSF of main house, or if it’ll be seen as a white elephant. It’s probably appealing to multigenerational families. Of course you’ll be able to rent the unit out for extra income (check Craigslist for similar rentals.) But another option is to add that sq footage to the main home via internal staircase, which should add value directly to the main home.
Do some local research, and post back here what you find out!
San Mateo, CA · Member since 2015 · 61 posts · 30 votes
7y
Curious to learn what are the specs of the existing house? I think for SFR's you will get far more value from sq. ft. addition in the main house. I would see ADU as a negative on a SFR unless your exit is to sell only to an investor looking for cash flow. Following this thread to learn more!
Investor · San Jose, CA · Member since 2018 · 313 posts · 230 votes
7y
The history of ADUs in the US goes back for generations. If you take that into account, these urban in-fill units will be quite valuable in the next few decades.
Again, I think that folk are correct about the exit strategy. Personally, I am adding an ADU to my property in Downtown SJ. I don't plan to ever sell. Instead, I plan to re-leverage the property with my income and boarder income to purchase more rental property.
Thank you all. Sorry for the late reply. I have single family house in Dublin CA, with large backyard. So my goal was to build ADU for extra income as initial research showed some positive cash flow against investment and its separate structure, so its easy to rent out to others. I don't have any plan to sell my property anytime soon. On top of positive cash flow, I was interested to also know if the ADU really adds enough value for ROI of investment when I sell, if at all, down the line in 3-4 years time period. The cost of ADU as I research more is really high due to huge fees like impact fees ranging from $25K to $50K (not known until City verifies all details) plus various other fees like Sewer approval, and various inspection, on top of actual construction cost. It seems the cost could go as much as $400/sq.ft. due to very high City fees.
@Brian Larson. Even in case of re-leveraging the property with additional income, does actual ADU does add any value for you in Downtown SJ? My plan was exactly same, that after building and renting it out, I have more leverage for additional loan for further investment, on top of adding value to my house. Adding extra sq.ft. to main house won't help in getting additional income so I didn't consider that.
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
7y
Of course the ADU will add value to your property. And if you're looking at it as a step up investment, it can make a lot of sense. 1- you'll be able to pull more cash out due to the added value upon completion. 2- you'll get extra rental income. I'd imagine around $1600-2000/month, which is significant. Look at Craigslist and Zillow for similar rentals to get rental comps.
Also try to make it a true 1BR and not a studio, as I think it’ll rent out better.