Building ADUs in San Diego: Unlocking New Opportunities
Introduction
Over the years, we have enjoyed designing a handful of Accessory Dwelling Units (ADUs) or granny flats. They have been rewarding design projects for us, often planned for a homeowner's family member. Though it's an opportunity to keep families together, it isn't the only reason to build an ADU. Dwell Magazine recently published two articles explaining new regulations offering homeowners added benefits.
The first article, "Trying to Buy? ADU Rental Fees Can Now Be Used as Income to Secure Your Mortgage", is good news for those looking to buy a home with an ADU. It says you can now count the money you make from renting out your ADU as part of your mortgage application. This is a move by the Federal Housing Administration to expand financing options to help with affordable housing.
HERE'S WHY THIS IS BENEFICIAL FOR SAN DIEGO RESIDENTS
More Buying Power: By considering the money you get from your ADU as part of your mortgage application, you could qualify for a bigger loan. This means you can afford a better home.
Extra Income: Renting out your ADU can give you a regular income, which can help you pay your monthly mortgage and grow your savings over time.
A Long-Term Investment: ADUs can increase your property's value and allow you to make more money by renting it out.
The second article - "In California, You Can Now Sell Your ADU" - introduces another intriguing opportunity. Traditionally, people built ADUs to rent them out, but now you can sell them too, thanks to California Assembly Bill 1033 (AB 1033). This bill will go into effect in January 2024. However, San Diego must choose to adopt the program and define local regulations.
HERE'S WHY THIS COULD BE BENEFICIAL FOR SAN DIEGO RESIDENTS
Make Money from Your Investment: If you decide to sell your ADU, you can earn a profit from the increased value of your property. A growing demand for ADUs in California makes them a valuable asset.
Help Others Find Homes: By selling your ADU, you can provide homes for others, like first-time homebuyers or people looking for affordable housing in San Diego. This supports California's efforts to solve the housing shortage.
Adapt to Changes: Your housing needs might change over time. Selling your ADU allows you to adjust to new circumstances, whether moving, downsizing, or making a different investment.
Conclusion
These regulations are still unfolding, so we share what we know in real time. There have also been other measures to increase housing, including California Senate Bill SB9, the "lot splitting" bill, which went into effect in January 2022. Another Senate Bill, SB10, would further increase density but is more controversial and has yet to be adopted in San Diego (for now). There are others, but the focus of this blog is to point out the benefits for homeowners based on these recent articles. Granted, building ADUs will not solve the housing shortage. Still, we love sharing opportunities with homeowners as it might be the incentive you need.
What we do: Architects Magnus focuses on improving the whole property, often including an ADU designed into the big picture. Our goal is to maximize the entire property's value through thoughtful design. If you're looking to build a basic ADU for quick rent, we are not your people; you can find others who focus on this market. If you want what we do, then please get in touch with us - we’d be pleased to help.