Are ADUs a Good Investment?
It is evident that the cost of housing has been rising. However, you can take this opportunity to increase your property value by adding an Accessory Dwelling Unit. A 2021 Porch Survey reported that “ADUs in big cities are priced 35% higher than units without one.” With the flexibility of an ADU there are a variety of options to either save money or enjoy rental income.
The number of people opting to build an ADU is growing every year because it is significantly less expensive to construct than it is to purchase a second home. At the same time, it can contribute financially in the long run. This is due to several factors. First, the land where you are building the ADU is basically free. Secondly, financing for ADUs is available and flexible, and lastly, the costs and schedule of its construction are predictable.
To further illustrate the benefit of an ADU as an investment. Let’s look at the case of our CAL 3 ADU in San Jose. We ran a detailed financial projection on building, financing, and renting out the ADU model, and the returns were very promising.
The Case for CAL 3 in San Jose, CA
To further illustrate the benefit of an ADU as an investment. Let’s take a look at the case of our CAL 3 ADU in San Jose. We ran a detailed financial projection on building, financing and renting out the ADU model and the returns were very promising.
CAL 3 ADU perspective.
CAL 3 ADU facade.
CAL 3 ADU interiors.
The estimated all-inclusive cost for the CAL 3 ADU is $216,000. A 30-year, 90% loan-to-value mortgage at 7%, yields a monthly payment of $1,293.
In San Jose, the average rent of a one bedroom apartment is $1,950 – $2,350/ month. The ADU will basically pay for itself when rented out. The anticipated net return can range from $657 – $1,057/ month.
With California Modulars we offer a wide range of standard and premium Accessory Dwelling Units which allows our clients flexible financing.
In general the base price of each ADU design that we offer includes and excludes the following:
Costs and Financing your California Modular ADU
The California Modulars system and building process allows us to offer a wide range of standard and premium Accessory Dwelling Units which opens our clients up for a more flexible financing based on what type of ADU chosen. Although we can’t give a fixed amount, in general however the base price of each ADU design that we offer has its inclusions and exclusions outlined below:
- Design and Architecture Fees
- Structural, MEP & Title 24 Engineering
- Permit Processing
- Mobilization and Construction
- Project Management
- Permit and other City Fees
- Soils Engineering
- Landscaping Design
- Fire Sprinklers
It is also important to be aware of the various factors that can affect the cost of a California Modular Accessory Dwelling Unit.
Different cities have different
requirements for permitting
FLUCTUATING COSTS OF MATERIALS & LABOR
Cost of materials and labor change from time to time which re-calibrates the costing for the project
The ease and difficulty of preparing the site for the ADU place can be a cost consideration
For a tailor-fitted estimate based on your ideal Accessory Dwelling Unit, you may contact us! Our team and our lines are open for questions and inquiries regarding costs and financing solutions that will deliver the most from your investment.