Blog Post

Why Aren’t More People Building ADUs for their Properties?

Dustin Edwards • March 12, 2021

An ADU adds Income and can Increase Property Value

ADU in Rear of Property
Looking at the value that an ADU can provide to a single family home, residential income property, or a multifamily property it is often surprising we don’t see a larger amount of development. To shed some light on why you might not be seeing as many ADUs developed as you might think possible we invite you to consider the following:

#1 - Many aren’t Aware that an ADU is an Option

When was the last time you were at a party and said “wow, can you believe the updates they made to the California Building Code this year?” ? Our guess is that you haven’t said that in quite some time...if at all and this is really why there aren’t more ADUs throughout California. The State Legislature has made a concerted effort to ensure that cities throughout California make updates to their local building codes to encourage development of ADUs but you won’t be seeing a flashy commercial campaign anytime soon.  

The reality is that many people aren’t aware that building an ADU and renting it is an option. While the state legislature has developed regulations to help each municipality it is up to each city to implement that guidance. This means that some cities haven’t adopted the state’s guidance (don’t worry Long Beach and nearby Lakewood have ADU guidelines to name just a few).

By understanding that ADUs are an option for your single family home or multi-family property you are ahead of the competition and can plan for the best possible addition to your property.

#2 - Some People aren’t Sure How an ADU would Rent

This is one of the head scratching moments as a property management company. When people try to initially compare a detached ADU they have trouble finding other “comparables”...largely due to the fact they are looking for other detached ADUs. The reality is that a detached ADU is nearly identical to that of many “2 on a lot” duplexes in Long Beach. Finding duplexes in Long Beach that are “two on a lot” are certainly a rarity and in high demand from renters.  

Detached ADUs offer the same element of privacy that is often found with a “2 on a lot” and that is difficult to find in a traditional apartment setting. We certainly understand not initially building an ADU due to being unsure of how it would rent. To understand rental potential of a proposed ADU we recommend speaking with a Long Beach Property Management company to understand the days on market of detached units, rental amounts, and longevity of the planned unit you intend to build. When you have the data in hand it will give you the confidence to build the detached ADU to your planned specification or make adjustments as necessary.

#3 - Financing Options are Limited for ADUs

Unlike purchasing a single family home, residential income property, or even a commercial apartment building there aren’t the same financing options available for ADUs. As ADUs fall under the expansion of an existing property they tend to fall under a construction loan agreement. Of course if you have looked into construction financing you might have found that your plans aren’t quite the size of loan that most lenders would prefer and the terms might not be to your liking either.

Construction financing is generally designed to be for the construction period and then converted to a permanent loan, but then what do you do if you have an existing loan on your income property or single family residence? This financing challenge is one element that has held back the increased development of ADUs. Property owners that have been successful in ADU development have generally used their own cash resources or a HELOC (home equity line of credit) to develop the property.

Finding a way to develop an ADU to ensure it maximizes your property value can be a challenge. If you’d like guidance on how to approach developing an ADU for your single family or income property we invite you to call us today at (562) 888-0247 as we’d be happy to help. When you want a quick check to see how much your property could fetch in rent we invite you to fill out our Free Rental Analysis where we perform a comprehensive comparison to share your rental stacks up to the competition.
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By Dustin Edwards November 18, 2024
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By Dustin Edwards November 12, 2024
It's important to prepare your rental properties for the colder weather. Although we don’t need to prepare for snow and freezing temperatures, we do need to prepare for the cold and rain. By ensuring your rental is cozy inside and prepared for the fall season , you can not only reduce energy costs for your tenant but also maintain your rental property value. Today, we’ll go over three signs your property is ready for this upcoming cold weather.  Sign #1 Proper Weatherproofing During the colder seasons, it's much easier for a tenant to notice any cold spots in your rental. Well-insulated doors and windows can not only help maintain the warm temperature but also prevent it from lowering. It can also prevent cold spots and drafts, which can help with tenant satisfaction . Doors and windows should be properly sealed and insulated to prevent drafts and maintain proper temperatures. A visual inspection of the weatherstripping around doors and windows to ensure they’re intact is a great place to start. If damaged, consider replacing them, as trying to seal gaps can be tricky and rarely lasts. Other seals should also be checked, as well as any areas that need to be caulked in order to keep cold air out. Insulation during the summer helps keep the cool air in, and during the winter, insulation in the halls and attics helps retain desired heat. Hot air rises, and if there isn't adequate insulation in the ceiling, heat will continually be lost. Luckily, adding insulation to an attic is not uncommon and typically only requires a day or two for installation. Sign #2 Energy Efficiency Measures During the winter, it's not just the cold you need to keep in mind. As days are much shorter, there is less sunlight to keep the rental warm and more hours of darkness. For this reason, it's a good idea to keep energy efficiency in mind when preparing for the cold weather. Energy-efficient lighting or smart lighting helps reduce overall costs since your tenant will likely use electricity to keep warm. Ensure your outdoor lighting is rated for external use, as this can provide crucial illumination during longer nights. Draft guards on doors and windows help reduce the load on your rental’s HVAC system which can significantly improve its lifespan. This is also a great time to replace filters and clean the ductwork in your rental to improve energy efficiency. Additionally, consider installing an insulative film on older windows, which helps retain heat and keep rooms warmer without the need for extra heating. If your rental has a programmable thermostat, ensure it’s in working order, as this can help tenants manage an energy-efficient heating schedule more easily. Sign #3 Property Exterior Southern California is a great place to settle down, and while we don't need to worry about snowfall or deep freezes, ensuring the exterior of your rental property is ready for the cold weather is important. With our cold season mainly bringing with it rain, inspect your rental property’s rain gutter system . Remove debris from drains and check for leaks or signs of wear and tear. Walkways should be clear of debris and well-lit. This may require you to prune and trim trees and bushes that may leave behind leaves. When combined with rainfall, a single wet leaf can cause someone to slip and hurt themselves. Consider adding non-slip mats or tape to areas where people may have tripped in the past. Much like during the hotter weather, it's important for your rental to be ready for fall and winter. By keeping your property ready for any weather Southern California has to offer, you ensure your rental property and tenants will provide steady rental income every month. If you need help preparing your rental for the cold weather or if you need help managing Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online .
By Dustin Edwards November 4, 2024
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