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Updated 19 days ago on . Most recent reply

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87
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Francisco Milan
  • Gilbert, AZ
26
Votes |
87
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Whats up with the new "We can help you build out a casita/ADU on your property" ads ?

Francisco Milan
  • Gilbert, AZ
Posted

Not sure if you guys have seen all these companies pop up offering homeowners to tap into their equity and build out guest houses on their property? What is that all about? 

Most Popular Reply

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Denette R.
  • Contractor
  • Los Angeles, CA
8
Votes |
21
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Denette R.
  • Contractor
  • Los Angeles, CA
Replied

I'm not sure what AZ has incentive wise but in Los Angeles because there's a housing shortage there are some incentives that you can take advantage of like...

CalHFA ADU Grant Program

The California Housing Finance Agency (CalHFA) offers grants up to $40,000 to cover pre-development costs such as architectural plans, permits, and utility connections. To qualify, applicants must:

  • Have a household income less than $84,160, which is 80% of the area median income for Los Angeles County.  
  • Be the primary resident and owner of the property. 
  • Apply through a CalHFA-approved lender or nonprofit partner, such as Neighborhood Housing Services of Los Angeles County.  

The grant funds must be used for pre-construction costs, including:

  • Architectural designs
  • Permits and impact fees
  • Utility hookups and energy reports 
  • Soil tests and property surveys

These funds are not available for construction costs. 

Local Incentives in Los Angeles

2. Fee Waivers and Reductions

Los Angeles and other California cities may waive or reduce certain fees for ADU projects, including:

  • Sewer and water connection fees
  • School district fees for ADUs under 750 square feet 
  • Permit processing fees 

These waivers aim to lower the overall cost of building an ADU. 

Additional Financial Assistance

3. Affordable ADU Loan Program (Orange County)

Although not specific to Los Angeles, this program offers eligible homeowners up to $100,000 in construction loans at 0–3% interest rates, provided the ADU is rented to a very low-income tenant for ten years. The loan is forgiven for each month the ADU is leased, with full ownership granted after the affordability period. 

Also keep in mind

  • Property Taxes: Adding an ADU will increase your property tax bill, as the value of the ADU is added to the property’s assessment. For example, a $200,000 ADU could raise annual taxes by approximately $2,500.  
  • Permitting and Construction Costs: While state laws have streamlined the permitting process, building an ADU still requires an investment of time and money. Homeowners should plan accordingly and consider potential financing options.

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