FAQs for ADUs

Are you considering adding more living space to your home? You may have heard about accessory dwelling units, or ADUs, and want to learn more. In this blog post we will explore what an ADU is, how it differs from other types of housing, and the benefits they can provide.

What does ADU mean?

An accessory dwelling unit (ADU) is a second housing unit on the same property as a main house. ADUs are almost always smaller than the main house and typically have a separate entrance from the main house. They contain all the main features you’d expect to see in a regular home, like a living room, a kitchen, and a bathroom.

ADUs go by many names, like tiny house, casita, carriage house, granny flat, backyard cottage, and in-law suite. Whatever you call them, they’re a flexible option for creating additional living space. Our blog post here has more information about the different types of ADUs.

‍Why do people build ADUs?

Although every ADU is different, people typically build an ADU for one of three reasons:

• More living space - Many Revival Homes customers have growing families or work from home, and want to use an ADU as a home office, a gym, or an extra bedroom for family and friends who are visiting.
• Multigenerational living - Other customers want to provide living space (or space for long visits!) for their parents or for adult sons and daughters. ADUs help families stick together, and help older people live independently in their neighborhood. You can read about one of our ADU projects for a multigenerational family here.‍
• Rental income - Some customers rent their ADU to a long-term tenant, a shorter-term tenant (like a traveling nurse), or on vacation rental websites like Airbnb or Vrbo. With record-high housing costs and a massive housing shortage in California, building an ADU can be a great way to help pay the mortgage and earn supplemental income. Here’s more information about a Revival Homes ADU that’s being rented to a graduate student at the University of Southern California.

What types of ADUs are there?

ADUs come in all shapes and sizes. One way to categorize them is by where they’re located on your property.

• Detached ADUs are a separate structure from the main house, usually located in the home’s backyard. Here’s one example.
• Attached ADUs are connected to the main house, usually by converting an attached garage into an ADU or building an extension to a house. Here’s one example.
• Conversion ADUs are built by turning existing non-livable space, usually a garage, into an ADU. Here’s one example.

Another way to classify ADUs is by the construction method used.

• Ground-up construction is how the vast majority of ADUs are built. This is simply traditional construction (think 2x4s and roof shingles).
• Modular ADUs are almost entirely pre-built in a factory, and installed at your home, often with a crane. 
• Prefabricated ADUs are built in components off-site, and installed at your home.

Our blog post here has more information about the different types of ADUs you can build.

Will my city allow me to build an ADU?

If you live in California, you’re almost always allowed to build an ADU at your home. Every city is required to follow a set of state laws that streamline the process of getting an ADU building permit, set consistent zoning rules, and eliminate rules that make it too difficult to build an ADU.

Generally speaking: if your ADU is less than 800 square feet, less than 16 feet tall, and more than 4 feet away from the property line, your city must permit your ADU. The city must also respond to your permit application within 60 days. Many cities, including Los Angeles and San Diego, allow detached ADUs that are up to 1,200 square feet and have 2 stories.

How long does it take to build an ADU?

Like any construction project, building an ADU is not an overnight process. We advise our customers to budget roughly one year from start to finish. Here are the major milestones:

• Planning and design (1-3 months): First, Revival Homes will help you select a project scope, create a budget, secure financing, and develop an initial set of designs. Then, our team will create a full set of architectural and engineering plans (a “plan set”), which we then submit to the city for approval.
• Permitting (2-4 months): Next, the city’s building department reviews the plans and requests any necessary revisions. Other city agencies, like the department of engineering or your electric utility, may also need to review and approve the plans. We coordinate this process with our architect and engineer to make all required revisions to the plans and get your permit approved as swiftly as possible. We have more details on the permitting process here.‍
• Construction (5-9 months): Once your building permit is approved, construction can begin. We work with our partner contractors to oversee the construction process, which includes site prep, building the foundation, erecting walls and a roof, installing plumbing, electrical, and HVAC,putting in insulation and drywall, and installing finishes and fixtures. Finally, the city will inspect the ADU and issue a certificate of occupancy, which means that the ADU is ready to be lived in!

How much does it cost to build an ADU?

The cost of building an ADU can vary significantly. The construction costs for our projects have ranged from $100,000 (a 400 sqft garage conversion) to $300,000 (a 1,200 sqft ADU with 3 bedrooms and 2 baths). The cost of construction depends on factors like:

• The size of the ADU
• Whether you build a 1 or 2 story ADU
• Whether you’re building new square footage or converting an existing structure
• The quality of fixtures, finishes, and appliances
• Whether upgrades to your electric panel or sewer connection are needed
• Whether you’re building on flat or sloped ground
• Whether demolition or removal of existing structures is required

When you book a free consultation with a Revival Homes ADU expert, we provide you with a line-by-line pricing estimate for your project.

How do people pay for ADUs?

Many homeowners choose a loan to finance their ADU. Typical lending options include:

• Home equity loan or home equity line of credit (HELOC): This is a second mortgage that allows you to use your home equity to finance construction; you pay the loan back over 10-20 years.  Home equity loans are widely available to homeowners with good credit, tend to be quick to close, and don’t require you to refinance your existing mortgage (which is a plus if you’ve recently refinanced and locked in a low rate).  Most banks will let you borrow up to 80% of your home’s current value (together with your mortgage).  However, if you’re a relatively new homeowner who hasn’t yet built up much home equity, this option probably won’t provide enough cash to pay for an ADU.
• An ADU HELOC: Several credit unions offer HELOCs that account for the gain in home value associated with your ADU project. For example, if your home is worth $800,000 today, but an ADU is forecasted to add $200,000 to your home’s value, the credit union will underwrite the loan to the estimated $1,000,000 value of your home once the ADU is built. This can be a great option for recent homebuyers who haven’t yet built up much home equity.
• Cash-out refinance: This is a type of mortgage that allows you to refinance your primary mortgage.  You access additional funds to pay for construction, and pay the loan back over 30 years, just like a standard mortgage. Like a home equity loan, cash-out refis are widely available and tend to be quick to close. However, you’ll have to retire your current mortgage, which likely means you’ll be paying a higher interest rate going forward. And like a home equity loan, relatively new homeowners probably can’t get enough cash from a cash-out refi to pay for an ADU.
• Renovation loan: This loan both replaces your existing mortgage and provides you with the funding needed to build the ADU; you pay the loan back over 30 years, just like a standard mortgage. These loans are uncommon, because few lenders offer them and they often come with many restrictions on the use of funds. 

Our blog post on ADU financing has additional information on these options.

Whichever loan you choose, make sure that you have enough cash savings for a down payment and for project cost overruns. Revival Homes can help you determine which lending product is right for you and assist you in securing project financing through our partner banks and credit unions.

I've heard that California offers a $40,000 ADU grant. Is this true?

At one time, the California Housing Finance Agency (CalHFA) offered an ADU Grant Program. The program reimbursed eligible homeowners up to $40,000 in pre-construction expenses that they'd already incurred on their ADU project. This typically included the cost of architectural designs and permitting fees, not actual construction.

Unfortunately, the grant program is no longer active - all of the funding was fully allocated in 2023. We're actively monitoring the program in case the state provides future funding to the ADU Grant Program.

How many ADUs can I build at my home?

This depends on the type of home where you plan to build ADUs.

At a one-family house, you’re allowed to build one full ADU (attached or detached) and one junior ADU. At a multifamily property, like a duplex, triplex, or small apartment building, you’re allowed to build up to 2 detached ADUs. You’re also allowed to convert some of the property’s “non-livable space”, like a laundry room, garage, or carport, into additional ADUs.

Some cities, like San Diego, allow more than one full ADU at a one-family house under certain conditions. 

Our experts can help you verify the number of ADUs that you may build at your property, and recommend different approaches to maximizing the ADU potential of your home.

What’s a junior ADU?

A junior accessory dwelling unit, or JADU, is a type of ADU that’s less than 500 sqft, and created entirely from the existing square footage of an existing single-family home. They’re almost always created by converting a house’s attached garage. Here’s an example of one of our past JADU projects.

Unlike a full ADU, a JADU can’t be detached from the main house. A JADU must have its own kitchen. It may have its own separate entrance and bathroom, but these are not required (the JADU may share an entrance and/or a bathroom with the main house).

Can I build a 2-story ADU?

In some cases, you can. The state law allows 2-story ADUs under the following conditions:

• If your home is within a half-mile of certain transit stops, you may build to a maximum of 18 feet.
• If your ADU is attached to the house, you may build to a maximum of 25 feet, unless your city’s base zoning imposes a lower height restriction.

Also, some cities, like Los Angeles, Anaheim, and San Diego, allow 2-story ADU in all or most cases. You can set up time here to speak to our ADU experts, who can help you determine whether a 2-story ADU is permitted at your home.

Can I build an ADU in front of my home?

This depends on whether your city’s zoning allows front-facing ADUs. If you have no alternative locations on your lot where you can feasibly build an ADU, other than in front of your home, then the state law requires cities to allow you to build up to an 800 sqft front-facing ADU. 

You can set up time here to speak to our ADU experts, who can assist you in researching your city’s zoning requirements for front-facing ADUs.

What’s SB 9? Does it allow me to build a second unit at my home?

SB 9, or Senate Bill 9, is a California state law that makes it easier for homeowners to build additional units on the site of a single-family home. Under certain conditions, owners of a single-family home may build a second full unit on their property (creating a duplex) and also build up to 2 detached ADUs. Alternatively, if the owner lives on-site, the owner may also split the lot, and build 2 more units on the newly created lot.

Since its passage in late 2021, SB 9 has been used only occasionally by property owners, and the state is currently considering new laws that would make SB 9 more flexible. If you’re interested in using SB 9 to build additional units on your property, our team of experts can assist you in determining your options and recommending a path forward.

How will an ADU affect my California property taxes?

Building an ADU does not trigger a property tax reassessment of your primary house’s value. If your home has a relatively low assessed value (this is typically the case for longtime homeowners), this low assessed value remains in place. The taxes you pay on the primary home will not change. 

Instead, your county tax assessor will do a “blended assessment” of your property. The assessor estimates the value of the ADU (usually based on its construction cost), and adds this number to the current assessed value of the property, to create a new “blended” property value. 

This means that once you complete your ADU, your property taxes will only increase based on the additional value created by the ADU. In most cases, the ADU adds only $1,000-2,000 per year in incremental property taxes, far less than the ADU’s rental potential and the gain in home value it creates. Our blog post has more details.

I have an unpermitted ADU at my home. Should I get it permitted?

If you have an unpermitted ADU, it’s a good idea to get it permitted. Revival Homes can assist you throughout this process.

The process of getting the ADU into compliance will ensure that the ADU is safe to inhabit, protecting you from legal liability. Also, if you decide to sell your home in the future, you’ll be able to count the ADU towards your home’s total square footage, potentially helping you maximize its sale price.

To get an unpermitted ADU legalized, you’ll first need to create architectural plans for the ADU and submit a permit application to your city’s building department — just as you would for a new ADU. Once your building permit is approved, a city building inspector will visit the ADU and assess its current condition, determining the upgrades that are needed in order to bring the ADU up to code. This often includes safety work on the foundation, framing, electrical wiring, and sewer connection, as well as energy efficiency upgrades.

Depending on the current condition of the ADU, the amount of work needed to get the ADU up to code (and, therefore, the cost) can range widely. Before you spend time and money on architectural plans and the permitting process, we recommend that you first partner with an experienced ADU contractor to forecast the scope of work needed to get the ADU up to code. 

Are solar panels required on my ADU?

California requires newly-built ADUs to meet the state’s energy efficiency code. This means that an ADU must include solar panels if it meets the following three conditions:

• The ADU is new construction (not conversion of existing space, like a garage)
• The ADU is detached from the main house
• The ADU is built using ground-up construction (not modular, prefab, or manufactured)

So a newly-constructed detached ADU must include solar panels. A garage conversion (whether attached or detached) or an attached new build ADU does not have to include solar.

If your house already has a solar system, and it has enough capacity to power both the primary house and the ADU, then additional panels are not required. Also, you can meet the ADU’s solar requirement by putting solar panels on the primary house or on the ADU. You can find more information about solar requirements here.

How much will an ADU increase the value of my home?

In California, building an ADU at your home can increase its value substantially. Based on our own analysis of thousands of recent home sales in Southern California, we forecast that an ADU adds 18-35% to the value of a home, depending on the ADU’s size. In most cases, the ADU adds value to your home above and beyond the cost of construction.

You can set up time here to speak to our ADU experts, who can more accurately forecast what your ADU project is likely to add to your home’s value.

Am I allowed to rent my ADU on vacation rental sites, like Airbnb or Vrbo?

This depends on your city’s local regulations of short-term rentals. Many cities, like Los Angeles and Pasadena, strictly limit your ability to rent an ADU on sites like Airbnb. We advise you to research your city’s short-term rental regulations before undertaking an ADU project. Our blog post here has additional information.

How do I get my ADU project started?

To bring your ADU project to life, you’ll need:

• A project plan
• A budget and financing plan
• Architectural plans
• A building permit
• A trustworthy contractor

Revival Homes can manage your ADU project at every stage. Our ADU experts will help you create a project plan and a budget, and we’ll assist you in securing project financing. You can work with us to develop customized designs and get construction bids from our network of trusted, pre-vetted contractors. We can also turn your designs into a formal set of architectural drawings and proactively manage the permitting process on your behalf, so you can get to building, faster.

You can get started today by scheduling a free consultation with a Revival Homes ADU expert.

Additional resources

You can learn more about ADUs here:

• Los Angeles Times guide to ADUs in Southern California
• The Casita Coalition’s guide to building an ADU
• Californians for Homeownership’s summary of state ADU laws
• Los Angeles Times article on Revival Homes’ ADU valuation model
• Los Angeles Times guide to permitting an unpermitted ADU
• The Casita Coalition’s guide to legalizing an unpermitted ADU
• Information on Senate Bill 9 (SB 9)