Since we just passed the law allowing ADUs, some companies are pushing for it. Its not cheap to build one/set one up.

My biggest concern is, a single family plus an ADU is not a two family. I don't like to spend $100K and have to sell right away for whatever reason and not be able to recoup my investment.

Do any of you have experience selling a property with ADU and how the appraiser figures out the value if there is no Comp to draw from?

A few thoughts come to mind here:

1. Ask some local appraisers about this. Also ask some experienced real estate agents.

2. Wait until some are done, especially in the area where your property is located. If the neighborhood makes a big negative problem over it the city might just slap more restrictions on them and decrease your value.

3. The companies that are pushing it are likely the ones who will overcharge to build one. 100K seems ridiculous.

4. These seem like an easier conversion from an existing separate garage than building from scratch.

5. Maybe wait and see all the restrictions the city puts on them. For example, minimum SQ footage, utility connection requirements, parking requirements and so on. It could be horrendous.

6. It might be easier to simply build an addition to the main house with an exterior door on it and a door inside you can close to separate them. Just run the existing utilities to the addition. As a contractor, I did hundreds of these in Calif. Additions and converting attached garages to "family room or den/office". Also, sometimes you will find stand alone garages that have an "apartment" over them. Sometimes these apartments are called "artist studios or workrooms". It's important to KNOW what the local zoning will allow and not allow as what you call it makes a difference. They may well allow an artist studios and disallow separate living quarters.Of course you have to understand the current laws where you are as well governing these. In some places if you call it one thing and use it for another, you are not allowed to collect rent and a bunch of other things bad tenants and their lawyers love to get you for. Check out some of those laws recently discussed about New Your tenants unions.

I don't sell, but I have at least five ADU's on four properties that I can think of offhand. Most of them were built in the 1920's-1940's, and take the form of a 1/1 above-garage apartment. The fifth ADU is an extra little building that used to be the maid's quarters back in the 1920's, but the appraisal district thinks of it as a workshop.

The thing that appeals about an ADU is that it's two income streams, but one set of property taxes. So if I have a vacancy, I still have money coming in, much like a multi--- but unlike a multi, the units are very, very different.

The other thing that's nice is that because my structures are so old, they get taxed almost like they're regular garages, rather than valuable units that are someone's home.

So if you were to build something-- try to build something functional, like a garage apartment, so that future owners have that option of having an income stream or just having extra options themselves. (Guest room, hobby area, space for an adult dependent or parent, storage, whatever.) The more flexible the space is, the more valuable it will be when the time comes to eventually sell.

We consider an ADU the same as a second unit. We have 6 ADUs. We don't sell but if we did and a Buyer didn't fancy the idea of landlording, well they have the perfect guest house. Or teen apartment. Or a true MIL house. I think they are very valuable in today's world with multi-generational living so common.

We install a sub-meter, and the bill remains in the LLC's name and we bill the tenants each month for their usage.

We send out the bills when we get them and they pay through their portal just as they do rent.

Deanna,

In those older above garage or connected to garage places, back in the 20's to 40's there was likely less attention paid to carbon monoxide than these days. Current codes require "fire walls" between garages and living areas. These walls and the ceilings need to be sealed tight (with drywall mud and tape and sometimes caulking) to prevent the possible leaking of carbon monoxide from both cars and gas water heaters that may be in the garage from getting into the living area. This should go all the way to the roofline, above the ceiling.

As a former contractor who has done hundreds of these things I have seen many of the older ones with either none or compromised walls between the different spaces. Older places often used balloon framing techniques that, if the walls are not covered with drywall or plaster, could allow carbon monoxide to go up into a living area over the garage. They need, at the least, fire blocking between the studs that is also sealed well with caulk (this also prevents the spread of fire up the walls if it happens).

Agree Richard but we also don't allow parking in the garage! It's storage only. Each unit gets half; we ran a false wall down the middle.

That's a really good thought. I hadn't thought about it.

Rents due, in my place, it is very easy to get additional gas meters, but hard to get electric ones. Like Wendy said, sub meter it..

In RI, I was told that you can build ADUs anywhere at the premise. Thanks to housing shortage. I have some basements that are more than 7' clearance that I can build ADUs.

Code compliance will be interesting to see. In RI, 3 families require hardwired smoke/co detectors.. If I build a basement ADU on an existing 2 family, the code may ask for hardwired detectors, then house meter, then.....

I can by a cargo shipping container, either 10', 20' or 40 feet long by 8 feet wide. So 80 square feet, 160 square feet or 320 square feet. They have elevated wood floors.

So I can either use two 20 footer or 1 40 foot cargo container and insulate, add drywall, electrical, plumbing, etc. And for $10,000 to $25,000, I can make myself an ADU.

My last one was a 20 foot container. I welded into place windows, a 36" door. added water, gas, power and a drain to an septic system, watering a rear patch of grass. The reason this small 20'x8' worked out is that it opened to a private yard area where I gave that tenant use of 20x20 yard. Partially covered with a retractable awning. I even put in a laundry machine. It also has a side stair case leading to the roof of the container. I installed a covered deck.

I bought a place at auction this year. I paid cash for it but refinanced after it closed. The house could have been either a duplex or as a granny flat. The little old lady used it as a hobby suite

The appraiser treated the place as a Granny flat as there were multiple SFH about the same size. There were much fewer MFH sold over the past six months.

Nice that your appraiser did that.

When I did a cash out on three dupes the appraiser struggled to find any comps.

Around here, if I want a separate water meter, that's $4k for a unit that doesn't historically have a previous separate water service, plus the price of the plumber's work in trenching from the meter to the new unit.

I just put a separate electrical service in my backyard earlier this fall. We have-- the 1920's maid's house-- which has its own bathroom. When we bought the house, there was a hot water heater that ran on a regular 110 plug, and it gave infinite hot water. But after it died and I went to replace it, it seems like those things don't actually exist. I didn't want to take up all the space that a full-sized gas hwh would require in such a tiny building, so I eventually opted for a wall-mounted electrical hot water heater. But that required me to upgrade the grandfathered electric.

It ran $400 for the tankless hot water heater, $1200 for the power company to run a new meter to that house, and about $2400 for the electricians to build the electrical service and install the hot water heater, etc. Fortunately, I was able to combine all my fees and have two meters bill to a single account, so instead of having two full bills, I just have my initial bill plus $40 for the rest of the time we live here. If I ever rented the little house out separately, the bill could be entirely separated from ours.

Our county tried to say the 'main house' must be occupied by the homeowner, but that was immediately challenged before it even made it into the written regs: basically unenforceable and against private property rights altogether.