LA residents are taking advantage of California’s new ADU laws — but what are ADUs, and why are homeowners building them?
In January 2017, a new California state law took effect allowing homeowners to convert part of their property into an additional living space. In LA, that law translates to a major opportunity.
The law concerns Accessory Dwelling Units, or ADUs: self-contained living spaces on the same property as a main residence. Occupying between 400 and 1,200 square feet, they may take the form of a backyard cottage, a converted garage, or even an attachment to the main house.
While the 2017 law opened up building requirements in all California cities, LA homeowners benefit from LA’s existing housing code, which does not require ADUs to be owner-occupied. Angelenos are taking notice: over the course of 2017 the number of ADU permits had risen from 142 to nearly 2000.
Here are three major reasons that LA homeowners flocking to ADUs.
1. Rental income — without the risk
Rental income is one of the most lucrative ways to earn money with little or no work input. But getting started as a landlord or real estate investor can be daunting: from choosing the right location to managing another mortgage, first-timers can easily get overwhelmed.
Building an ADU is an excellent way to get a foot in the door while side-stepping much of the risk. The cost of an ADU is a fraction of that of most stand-alone properties, and doesn’t require scouting out a new location.
2. Increased property value
Planning to sell your home sometime in the future? An ADU can be a major asset. A 2012 study in Portland, OR found that ADUs contributed between 25% - 34% to a home’s resale value. For many LA residents, this translates to hundreds of thousands in increased property value.
3. A flexible space for family, friends or yourself
ADUs are also convenient ways to keep family members close — without being too close. As self-contained living units, they offer the advantages of separate living quarters while retaining the benefits of close proximity.
Some homeowners choose to occupy the ADU themselves and rent out their main house, covering their mortgage and cutting living costs significantly. Aging homeowners are also attracted by the prospects of aging in place, adjusting their housing to their lifestyle without the strain of relocating.
As California’s population grows, we need sustainable solutions that work within existing infrastructure. ADUs are a new, promising option that houses our residents and puts the profits directly into homeowner’s hands.