Guide to Buying an ADU in Los Angeles

As the housing market in Southern California continues to change, homeowners are increasingly turning to Accessory Dwelling Units (ADUs) as a means to increasing the amount of livable space on their property. Synonymous with granny flats, in-law suites, or secondary dwellings, ADUs can either be attached or detached from the primary residence. In this guide to buying and ADU in Los Angeles we primarily focus on detached ADUs. A common use for these secondary units is as a rental property as it affords homeowners an alternative stream of income. Whatever your indented purpose is, we’ve got you covered when it comes to buying an ADU in Los Angeles.

What is an ADU?

From a technical standpoint, an ADU is a secondary dwelling unit that is located on the same property as the primary residence. These units can either be attached to the primary home, above the garage for example, or act as standalone dwellings. It is also important to note that ADUs are tied to the lot that they are on meaning that an ADU cannot be sold separate from the primary residence.

Why Might You Want an ADU?

• Additional living space - with quick construction times and relatively little site work, ADUs are a straightforward solution to increasing the amount of livable space on your property

• Alternative form of income - ADUs are an increasingly a popular way to earn secondary income. Since ADUs can be built separate from the main residence, once permitted, the extra space can be rented out and generate additional income for homeowners

Key Decisions

• Size - California state regulations limit  ADU size to 1,200 square feet or ½ the square footage of your primary residence, whichever is smaller. Though most towns further limit the permissible size of ADUs. Despite these restrictions there are still plenty of companies that manufacture ADUs and deliver to the Los Angeles area.

Los Angeles	http://planning.lacounty.gov/adu/	•Has yet to pass a city specific law, therefore 1,200 square feet is the maximum •May require the creation of additional parking spaces
Beverly Hills	http://www.hcd.ca.gov/policy-research/docs/ordinances/Beverly-Hills-02-07-2017.pdf	•ADUs must be smaller than 1,200 square feet or 50% of the square footage of the primary residence
Newport Beach	https://www.newportbeachca.gov/trending/projects-issues/accessory-dwelling-unit-ordinance	•ADUs are limited to 750 square feet or 50% of the square footage of the primary residence (whichever is less), if detached from the primary residence
Santa Monica	https://www.santamonica.gov/press/2018/05/30/new-regulations-for-accessory-dwelling-units-in-santa-monica	•Maximum size for ADUs is 600 square feet for lots less than or equal to 6,000 square feet or 800 square feet for lots exceeding 6,000 square feet

If you live in an area other than the ones listed above, you can contact us here and we will be gladly assist you in finding the appropriate information

Standard vs. Custom - Many prefab manufacturers offer pre-designed models small enough to qualify as an ADU. However there are many custom ADU builders that operate in the LA area. This is particularly beneficial if you live in an area where standard design options may be limited - small work area or sloped lot

Common Questions

• How long does it take to build an ADU?

  • ADU construction times are significantly less than the 1-2 years it takes to construct a standard prefab home. Some ADU manufacturers have installation times as quick as 6 weeks from the time the deposit is received

• How much does an ADU cost?

  • While variables such as location, manufacturer, and lot-specific conditions may change your exact cost, an ADU will likely cost between $250-$500 per square foot.

• Can I finance my ADU construction?

  • Yes, though financing an ADU may be slightly different from financing a primary residence. Whereas, buyers interested in financing a traditional prefab build might want to consider a construction loan or a temp to perm loan, individuals interested in an ADU may have a more advantageous financing options. Because ADUs are often less expensive than traditional homes, borrowing options can be expanded to include financing such as a personal loan or Home Equity Line of Credit. With a personal loan:

    • Many personal lenders allow you to borrow up to $100k with no down payment

    • These loans are typically amortized over a shorter period than mortgages (up to 12 years)

    • These loans typically don’t underwrite the property and instead underwrite you as a borrower

    • Many of the best personal lenders are online and serve almost the entire country

    • The time to get approved for a personal loan is generally pretty fast (as little as a day to up to a couple weeks)

With Home Equity:

• You must have enough “equity” built up in your current home

• Also considered “second mortgages”

Reputable Companies that Build ADUs in the Los Angeles Area:

• Kasita

  • Offers one, 352 square foot model, complete with smart appliances

  • All-in-cost: $600 per sq ft (though this can vary by location)

  • https://kasita.com/

• Modative

  • Specializes in ADU construction and offers 3 designs with 5 total layouts

  • All-in-cost: $340-$400 per sq ft

  • http://www.modative.com/adu

• Cover

  • Builds custom ADUs and delivers to the greater Los Angeles Area

  • All-in-cost: $300-$400 per sq ft

  • https://www.cover.build/

• KitHaus

  • Make 4 models of modern tiny-homes perfect for use as an ADU

  • All-in-cost: $330-$550 per sq ft

  • http://kithaus.com/

• Cocoon9

  • Has 3 single-story luxury home models, ranging from 160 to 480 square feet.

  • All-in-cost: $780 - $800 per sq ft

  • http://cocoon9.com/

Or, for a more complete list of builders, see our list of the Best ADUs for Sale in Los Angeles