Maximize the ROI On Your Property With Our Free ADU Investment Proforma Worksheet

If you are considering investing in an Accessory Dwelling Unit (ADU) to maximize the value of your property or generate rental income, you have found the right place. Homeowners like you are an integral part of addressing our housing issues, while ADUs can also be a huge part of building generational wealth. Modern ADU Plans has developed free resources to help you make informed decisions about your ADU project. Along with our ADU Budget Worksheet, we highly recommend downloading our comprehensive ADU Investment Proforma Worksheet.

But First, Why Choose To Build An ADU?

ADUs are on the rise across the US and Canada for good reason. Accessory Dwelling Units help homeowners increase their property value, generate rental income, or provide a space for family members and guests. Many of our cleints even build an ADU for themselves to move into so they can rent out the larger main house. This is especially popular if their kids have grown up and moved off to college.

Not only are ADUs great for homeowners like you, they are also great for our communities. Towns and Cities across the country are facing housing shortages as we have underbuilt housing for decades now. We see this issue manifest in the homeless crisis we see and hear about on the news and in our towns. ADUs can be a great way to add new housing options in an affordable way without leading to sprawl. They are a sustainable way to increase housing supply within our communities.

These versatile structures are cost-effective, environmentally friendly, and can significantly boost the overall value of your property while improving your neighborhood.

Make Informed ADU Investment Decisions

Like investing in other real estate assets, building an ADU requires careful planning and consideration of various factors such as construction costs, potential rental income, financing options, and return on investment. Our free ADU Investment Proforma Worksheet is designed by experts in the field to help you analyze these crucial aspects and make sound financial decisions.

Although small in size, building an ADU is still a significant investment. It takes hundreds of thousands of dollars to build a quality ADU and we want you to spend your money wisely. Specifically, we want you to have a positive return on this investment. You should see cashflow on a monthly basis through rental income as well as an increase in your property value if you ever decide to sell the property in the future. This is why we advise our clients to work through a project proforma and develop a comprehensive project budget at the outset of an ADU project.

The Power of Data-driven Planning For Your ADU

Our worksheet provides a clear layout for inputting your project specifics, including construction costs, estimated rental income, financing terms, and ongoing expenses. By utilizing this powerful tool, you can project your potential cash flow, calculate your return on investment, and assess the financial viability of your ADU project.

What you need to do is some basic research on your local market. Input the going rates for similar sized rental units in your area, research local construction costs, and contact your bank for information on financing options. We can also assit you with answering these questions and filling out the proforma if you need help.

How to Get Your Free ADU Investment Proforma Worksheet

To access this valuable resource and kickstart your ADU investment journey, simply download our free ADU Investment Proforma Worksheet using the short form to the right. Empower yourself with the knowledge and tools needed to make informed decisions and maximize the potential of your property by planning for your new Accessory Dwelling Unit.

Don't miss out on this opportunity to take control of your financial future with an ADU investment. Download our free worksheet today and embark on your path to property enhancement and financial success!

Disclaimer: The information provided in the ADU Investment Proforma Worksheet is for general informational purposes only and should not be considered financial advice or legal advice. Please consult with a qualified professional for personalized guidance tailored to your specific situation.

Invest wisely, invest in ADUs with Modern ADU Plans.

Your ADU Proforma worksheet is complete and you are ready for the next steps?

There are a few ways you can move your project forward after you work through the proforma and make the decision to proceed with building an ADU.

You can hire a designer to help develop a custom designed ADU, purchase a pre-designed ADU plan, or talk to an ADU expert to discuss your ideas and develop a plan. Modern ADU Plans offers all of these options to help homeowners like you achieve your ADU goals.

There are three convenient buttons to the right, each offering you a way to take the next step towards your ADU.

Maximizing Your ADU Budget: Download Our Free ADU Budget Worksheet Today

If you are considering building an Accessory Dwelling Unit (ADU) but feeling overwhelmed by the costs involved, we sympathize. ADUs are significant investments even though they are small houses. There is also a lot of misleading information out there on ADU Facebook Groups, ADU blogs, and other sources. Budgeting for an ADU project can be a daunting task, and can get complicated, which is why we have created a comprehensive ADU Budget Worksheet to help you plan effectively and maximize your budget.

Why You Need an ADU Budget Worksheet

Your ADU project's budget is crucial to ensure that you stay on track and avoid financial surprises along the way. Planning early and accurately can help you save costs and avoid mistakes on your ADU build. Our ADU Budget Worksheet is designed to assist you in estimating costs accurately, identifying potential expenses, and helping you make informed decisions throughout the construction process. It is a guide that you can use early on in the planning process, but also set up to help you track the actual costs and compare them against your budget throughout the ADU design and construction process.

What Does Our ADU Budget Worksheet Offer?

Our free ADU Budget Worksheet includes detailed sections for all aspects of your ADU project budget, such as:

• Construction Costs: Estimate expenses for materials, labor, permits, and more.

• Design and Planning Fees: Include costs for architectural plans, engineering, and other design-related expenses.

• Utility Connections: Budget for water, electricity, and gas connections.

• Interior Finishes: Plan for flooring, fixtures, appliances, and other interior design elements.

• Exterior Finishes: Estimate costs for siding, roofing, landscaping, and other exterior finishes.

• Contingency Fund: Allocate a percentage of your budget for unforeseen expenses.

How to Download Our Free ADU Budget Worksheet

Getting your hands on our ADU Budget Worksheet is easy! Simply click the download link to the right to access this essential tool for your ADU project. Take the first step towards a well-planned and budget-friendly ADU construction process today.

Don't let financial concerns hold you back from realizing your ADU dream. Download our free ADU Budget Worksheet now and pave the way for a successful and cost-effective ADU project. Download now and start building your dream ADU with confidence!

Remember, proper budgeting is the key to a stress-free ADU construction experience. Let our ADU Budget Worksheet be your guide as you embark on this exciting journey.

Your ADU budget worksheet is filled out and you are ready for the next steps?

There are a few ways you can move your project forward after you work through the budget. You can hire a designer to help develop a custom designed ADU, purchase a pre-designed ADU plan, or talk to an ADU expert to discuss your ideas and develop a plan. Luckily Modern ADU Plans offers all of these options to help homeowners like you achieve your ADU goals.

There are three convenient buttons on the right side of this blog, each one offering you a way to take the next step towards your ADU.

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Next Steps for your ADU Project:

Video: 5 Things to know before building your ADU

Southern Californians are racing to build accessory dwelling units — or ADUs — small, fully equipped homes on the same lot as a larger house. But building an ADU can be complicated and expensive. This video discusses 5 things you should know as you embark on building an ADU on your property.

Read the full story from the LA Times: You Do ADU, Part 1: Thousands of Californians are building ADUs. Should you?

California ADU Regulations - 2024

Navigating the regulations that affect new ADU projects can be daunting. Each state, county, city or town has their own rules and regulations that affect these projects. However, some states are passing state-wide rules to aim to unify some of the restrictions and make ADU development easier. California is one of the states leading this charge as they aim to promote ADUs as an important part of addressing housing affordability challenges.

With the goal of making ADUs easier to build, California has been passing some great laws that have drastically changed the ADU rules. There are some big changes even from last year. In the article below we will discuss some of the updated rules. But first, let’s start with the basics.

What is an ADU?

ADU is an acronym for Accessory Dwelling Unit. Often called other names like casita, laneway suite, garden suite, granny flat, or even guest house, ADUs are secondary homes built on a property, which are accessory to the primary structure. Unlike tiny houses on wheels, ADUs are full houses and include permanent foundations, separate entrances from the main house, fully functional kitchens, full bathroom, space for sleeping (either a bedroom or space for a bed if the unit is a studio), plus full utilities (water, sewer, and electricity).

ADUs are typically built as rental units, houses for extended families, or homes for downsizing and aging-in-place. In many places they can also be used as short-term rentals like for AirBnB or VRBO, although some towns and cities prohibit this use as they want ADUs to be used as permanent housing.

California Regulation Changes for 2024

Where there once was a tapestry of different rules and regulations across the state, California has been working on passing ADU laws that are applied statewide. Government officials have seen the challenges of having so many different rules and restrictions, thus they have been working to pass laws that override local restrictions that were used to prohibit or significantly hinder the ability for some homeowners to add ADUs to their properties. Because ADUs provide a lot of benefits to both individual property owners as well as society at large, passing statewide regulations that are easy to meet is helping people build enough ADUs to significantly increase the housing supply across the state.

Owner Occupancy on the Property

Owners are no longer required to live on the property if they want to build an ADU and rent it out according to AB 976. Property owners can now build ADUs and rent out both the main house and the new ADU. California has removed this requirement statewide, meaning no local jurisdiction can make this a requirement. This is a win for those looking to add ADUs to properties they currently own but are renting out. We believe ADUs are great investment opportunities and this doubles down on that belief.

ADUs can be sold separately as Condos

We absolutely love this change and think it is a true game changer for ADUs. It is something we hope spreads nation-wide as a way to make more affordable starter homes available for purchase.

Basically, it is now possible to build a new ADU on a property, and then condoize all of the homes on the property to be able to sell them separately. Meaning, you can now develop ADUs as a for-sale product rather than just as a rental unit. This is great if you want to build an ADU as an investment but want to get your money out of the project relatively quickly.

In markets where housing prices are quite high, you could see situations where you may build an ADU for say $300,000, condoize the property, and then sell off the ADU for say $450,000. In just a year or two you could see a 50% return on your investment. Plus you are creating a home that can be purchased for a very reasonable cost compared to many homes on the market.

ADU Types that are now allowed in California

All residential properties are eligible to add an ADU. And depending on the size of the property you could build up to 3 ADUs on your property - one Junior ADU (JADU), one attached ADU, and one Detached ADU (DADU). You can also convert existing structures like garages into ADUs.

ADU Size regulations

There are different maximum size limitations based on the property and layout of the ADU. In all cases you should be able to build an ADU up to 800sf. Individual jurisdictions can’t limit ADUs to below that size but can pass local laws increasing the maximum size an ADU can be. The state has passed laws that if no maximum size is defined then the maximum size is automatically set at 1,200sf for detached ADUs. If you are doing an attached ADU you can build up to 50% of the floor area of the main house or 800sf, whichever is larger.

Furthermore, if you are converting an existing structure you don’t have to abide by ADU size limitations as long as you aren’t expanding the size of the structure. If you stay within the existing footprint you can have an ADU of any side. This is great news if you are converting a large garage, basement, or other existing space into an ADU

Property Setbacks for ADUs

Most properties have setback requirements for buildings that prevent you from building right up to the property lines. I am very much against property setbacks as they prevent us from building some of the best housing types, like attached row houses. Side setbacks especially should be illegal nation-wide. But that is a battle for another day.

For ADUs in California side and rear setbacks are set at 4’ unless a local jurisdiction passes a law reducing that. Places like San Diego have stated that there is a 0ft side and rear setback for ADUs!

The front setbacks are a bit more flexible and can still be set by each jurisdiction as long as it doesn’t hinder the property owner’s ability to build an ADU up to 800sf.

ADU Height Limits

Height limits get a bit more complicated as it depends on location of the property, existing structures, and the type of ADU. The following rules apply:

• 16 ft height limit is the minimum for every ADU in California under any circumstance. Local jurisdictions can’t enforce a lower height limit. This most likely leads to a single story ADU although we have found some creative workarounds to get two-story ADUs within a 16’ height limit. Curious? Contact us for more information.

• 18 ft heights are allowed if an ADU is within 1/2 mile walking distance from public transit or if the property already has a two story tall multi-family dwelling. 18’ tall ADUs can definitely be a two story structure.

• 25 ft height limits are imposed if the ADU is going to be attached to the main residence. Even if the main house is taller, the ADU can only be 25’ tall.

Parking Requirements for ADUs

This is another area where we disagree with many of the regulations. Under no circumstances should parking be required on any property. It should be up to the property owner to decide if they want to build parking. Parking minimums are the dumbest laws and directly lead to more expensive housing and terrible environmental impacts. Parking requirements should be abolished nation-wide.

Alas, here are the rules:

• Off-street parking is required for ADUs in most circumstances.

• Exceptions:

  • If an ADU is within 1/2 mile walking distance from public transit

  • If the ADU is within a historical district

  • If the ADU is a conversion of existing space (like a basement or garage)

  • If the ADU is located within one block of a car-share vehicle

  • On street parking permits are required in your neighborhood but aren’t offered to the occupant of the ADU

• If you are converting a garage into an ADU, you are not required to replace the lost parking space.

CalHFA ADU Grant Availability

The CalHFA ADU Grant provided up to $40,000 towards the soft costs of building an ADU (soft costs are things like design, permitting fees, etc.). It was so popular that the latest allotment of $25 million committed to the program was claimed in just a few days. Thus no more funds are available as of the start of 2024.

Considering the popularity of the program and the continued need for new housing there is a good chance that it will be refunded in the near future.

Fire Sprinkler Requirements for ADUs

Fire sprinklers aren’t required except in a few circumstances. If they are required in the main house then they are also required in the ADU. Also, if the ADU is built far enough away from road or driveway access a sprinkler system may be required. This is due to access to the structure by the fire department and access for their trucks combined with length of fire hoses. If your ADU will be located more than say 150’ away from the street you may need to install sprinklers. Contact your local building department to verify the specifics of your project.

ADUs are now allowed on multi-family properties

All multi-family properties are now eligible to have ADUs. In fact, you can add at least one ADU by converting existing space in the building and you can add up to two additional detached ADUs. It gets even better. If the multi-family building has more than 8 units, you can add up to 25% of the number of units in the existing building. Example: if you have a 12 unit apartment building you can add up to 3 ADus (25% of the existing units).

Solar Panel Requirements for ADUs

When building a detached ADU it is required that you have solar panels on either the ADU or the main house. However, there are some exceptions for prefab ADUs or Modular ADUs. There aren’t solar requirements for basement ADUs, or JADUs.

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Ready to start your ADU Project?

At Modern ADU Plans are here to help you achieve your goals and have a successful ADU project. Head over to our ADU store to find a beautiful ADU that meets your needs, or contact us if you are considering a custom designed ADU solution. We also offer some free resources on this website and consultations if you want to meet with an ADU design expert to ask questions.

What Makes The Best ADU Design?

The Accessory Dwelling Unit (ADU) has emerged as a transformative force in modern housing, offering homeowners opportunities for additional income, flexible living space, and even multigenerational living. But amidst the excitement, a crucial question arises: what makes the best ADU design?

There's no one-size-fits-all answer, as the ideal ADU blends seamlessly with the characteristics of your property, your project budget, and the intended use of the ADU. However, certain key principles guide the creation of exceptional ADUs:

1. Functionality Reigns Supreme:

Start by defining your vision. Will the ADU serve as a rental unit, home office, in-law suite, or guest quarters? Each purpose demands distinct functionalities. Prioritize essential features like the number of bedrooms and bathrooms, size and layout of kitchens and living areas, carefully considering occupant needs and space limitations. Utilize space-saving solutions like built-in storage, convertible furniture, and open floor plans to maximize every square foot.

2. Embrace the Power of Design Flexibility:

Don't be confined by conventional layouts. Explore various ADU plan options online, including pre-designed blueprints or customizable ADU floor plan templates. These resources offer a springboard for inspiration, allowing you to adapt and tailor the design to your specific needs. Remember, flexibility doesn't compromise style. Look for plans that integrate with your personal style and taste, or your existing home's architectural style, creating a cohesive aesthetic.

3. Invest in Sustainability:

A well-designed ADU is not only functional and stylish, but also environmentally conscious. Consider incorporating energy-efficient features like solar panels, water-saving fixtures, low-energy lighting and other systems, and recycled and locally sourced materials when possible. These choices not only benefit the environment, but also reduce your long-term operational costs. Remember, sustainable design is an investment in your future and the planet's.

4. Let Natural Light Flow:

In any living space, natural light is essential for well-being and creating a sense of spaciousness. Opt for generous windows, skylights, and strategically placed light sources to illuminate your ADU. This design element not only enhances aesthetics, but also promotes mental and physical health. It can also reduce your electric bill.

5. Don't Neglect Outdoor Connections:

Every ADU benefits from a connection to the outdoors. Include a private patio, deck, or balcony for occupants to enjoy fresh air and natural surroundings. This outdoor space can become a haven for relaxation, entertainment, or even gardening, further expanding the living experience. With the smaller square footage of ADUs, outdoor living space can make them feel and act larger then they are.

Ready to Transform Your Vision into Reality?

While these principles provide a roadmap, crafting the perfect ADU requires expert guidance. Consider partnering with experienced architects, designers, and builders who specialize in ADU construction. Their expertise can ensure regulatory compliance, structural integrity, and aesthetic harmony, transforming your vision into a functional and beautiful reality.

Investing in an ADU is a wise decision, unlocking both personal and financial benefits. By incorporating these design principles and seeking professional guidance, you can turn your ADU into an asset that enriches your life and property for years to come.

Start your ADU journey today! Explore our comprehensive database of ADU plans and connect with qualified professionals to bring your dream to life.

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One of the most popular ADU designs on the internet is available for purchase. What makes this the best ADU design? The ADU plan is simple yet functional. The design is both modern yes practical and affordable. People love the covered outdoor space, the large windows, and the large open great room making the ADU interior design both beautiful and functional.

Case Study: the Garcia Family and Their Backyard ADU Investment

The Garcia family, located in sunny California, faced a common challenge as their family grew: the need for more space. With adult children struggling to afford the cost of purchasing a new home close to their parents, they decided to explore the idea of adding an Accessory Dwelling Unit (ADU) to their property for multi-generational living. The idea was for the parents to move into the ADU designed for barrier-free living and aging-in-place, while the younger family members moved into the main house. Little did they know, this decision would result in a great return on their investment and much more.

The Decision to Invest in an ADU

After careful consideration and research, the Garcia family made the decision to move forward with building an ADU in their backyard. They saw it as an opportunity to create additional living space for their family, and also as a potential source of rental income in the future. The flexibility and potential for a high return on investment made the idea even more attractive.

What pushed them in this direction was the incredibly high cost of purchasing a single family home in California. The cost of building a new construction detached backyard ADU was approximately half the cost of buying a new home which made this decision a no brainer for their family.

Construction and Design

The Garcia family wanted a high quality design but also were hoping to minimize the cost of the design process as well as cut down on the time a custom design would take. After researching a variety of options including hiring an architect for a custom designed ADU, purchasing a prefab ADU, or going with a pre-designed ADU plan set, they decided that starting with the pre-designed plans but then customizing their prefered plan to fit their needs was the best approach - balancing cost and quality.

They worked closely with our team of professionals to adapt one of the modern ADU plans for sale. The unit was designed to be a comfortable, fully functional living space complete with a kitchen, bathroom, and large bedroom that offered great views to the backyard garden. The thoughtful ADU design was focused on barrier free living and aging-in-place perfect for their parents to move into and age gracefully. Although it was designed for elderly residents, the high-quality design will enable the ADU to be a desirable living space for potential renters in the future. This gives the new backyard ADU the flexibility for immediate needs and long term financial return on the investment.

Return on Investment

After the completion of the ADU, the Garcia family enjoyed the immediate benefits of the additional space. Their adult child who moved into the main house, was able to afford their own home for their growing family while still being close to their parents. They also had the added benefit of child care close by. The ADU saved thousands of dollars each month compared to the rental prices in their area. It also will be a lot cheaper than having their parents move into a retirement or assisted living home in the future.

They also have a ready made rental unit in the future that they estimate would bring in between $2,000 and $3,000 dollars per month in rent if/when they decide to put it on the market. This will give the young family additional income and provide financial flexibility.

Added Property Value

The backyard ADU not only provided financial benefits but also added value to the Garcia family’s property. The increased square footage, modern design, and the versatility of having an additional living space on the property boosted the overall value of their home. Should they decide to sell in the future, the presence of the ADU could potentially attract more potential buyers and increase the resale value of their property, potentially by hundreds of thousands of dollars. Taking the tight residential real estate market in California into consideration, and they anticipate the value to continue to rise significantly over time.

Conclusion

The Garcia family's decision to invest in building a backyard ADU proved to be a wise choice and one that thousands of families are deciding to make each year. From providing much-needed space for their growing family to generating a significant return on investment through rental income and added property value, their backyard ADU has been a great success. Their story serves as an example of how an ADU can be a wise investment, providing practical and financial benefits for homeowners. If you’re considering adding an ADU to your property, the Garcia family's experience is a testament to the potential rewards that come with this decision.

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Stay tuned for more inspiring stories and useful tips on modern ADU living at Modern ADU Plans.
Thank you for the opportunity to share this story and highlight the positive impact of adding an ADU to a property.