Orange County, CA · Member since 2018 · 16 posts · 0 votes
I own an about 3,000 s.f. house in a gated SFH community in Huntington Beach, CA, and am considering building an ADU of about 900 s.f. on the same lot. Based on my preliminary research, it appears as though I should not have any problem getting an ADU approved by the HOA and the City. However, since this is the first time I am looking into this issue, I'd appreciate any advice as to what problems I may run into getting the project approved. Also, how would building an ADU affect the value and marketability of the house? I am trying to avoid any unintended consequences . . . for example, may adding an ADU in a fairly upscale gated SFH community decrease the desirability of the house for prospective buyers when I am ready to sell? Any other pitfalls I should consider?
Also, what should I budget for this project for the architect/engineer/permits? What should I budget per SF for construction?
Flipper · Mission Viejo, CA · Member since 2014 · 2k+ posts · 1k+ votes
6y
@John Cusick I just stopped by a project last month that @Rafael Hoefel Pozas completed in Huntington Beach. He would be the person to answer all your questions.
I believe it was built for 300 sqft and it was a 500 sqft ADU. The owner was going to rent out at $2400 a month. If you do the math you can determine the payback period.
Flipper · Mission Viejo, CA · Member since 2014 · 2k+ posts · 1k+ votes
6y
@John Cusick I just stopped by a project last month that @Rafael Hoefel Pozas completed in Huntington Beach. He would be the person to answer all your questions.
I believe it was built for 300 sqft and it was a 500 sqft ADU. The owner was going to rent out at $2400 a month. If you do the math you can determine the payback period.
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
6y
City and County Planning will generally be easy - what do your CCR's say with HOA? Who is on the HOA Board? Build an ADU that is of same exterior architectural and eye pleasing as the current house to add value also think about landscaping and plantings that create privacy and sound barriers
Rental Property Investor · Los Angeles · Member since 2020 · 88 posts · 74 votes
5y
Hello,
I just purchased a property in Lake Forest with the intent of adding a 1000 sq ft 2 bed / 2 bath with den ADU in the backyard. The company I'm using actually showed me an ADU they were building in Long Beach and are highly knowledgeable. The company does both modular homes built in a factory or build from the ground up. Timelines are the same for both modular homes vs ground up - 1 month for plans, 2 months for city approval, and 3-4 months to build depending on weather conditions. The modular home for 1000 sq ft is about 220k vs 275k from the ground up. Ground up requires solar panels and usually appraise better, but modular homes are cheaper, require less on-site construction (usually 2-3 weeks only), don't appraise as high, and tenants cannot tell the difference. Since modular homes must be craned into your backyard, you need a nice rectangular backyard. Keep in mind, just because you spend 275k on an ADU, doesn't mean the house will appraise 275k higher. Since my backyard is L shaped, I have to do from the ground up.
For financing an ADU, best options are HELOC from primary/secondary home or cash-out refinance. Construction loans are an option but interest rates run from 5-7%. Could do a construction loan then refinance the property to pay off the construction loans.
Junior ADUs must be attached to the primary residence (i.e - attached garage can be converted to a jADU, but detached garages do not qualify) and require owner occupancy which is a huge downside if you are trying to buy a new property every year for owner use to get away with <20% down payment.
For some numbers, my main house is 4bed/2bath renting for $3500/month and ADU 2 bed/ 2 bath + Den used as 3rd bedroom will rent for around $3000/month. Main house 10% down with 2.625% interest rate and ADU financed with a HELOC with around 4% interest rate. I am anticipating about $1,400 cash flow after expenses. I currently have tenants in the main house as I am constructing the backyard ADU, but made it clear upfront that there would be 3-4 months of construction. With modular homes, it would be less on-site construction.
I specifically target properties with large lots to build ADUs as duplexes/triplexes/4plexes seem to be extremely competitive in CA.