The base costs to build our pre designed backyard homes are listed on our ADU Model page, in price builder section. But, it is important to understand what these costs include and what they exclude.
- Design & Architecture Fees
- Structural, MEP & Title 24 Engineering
- Permit Processing
- Mobilization & Construction
- Project Management of all of the items above. You only deal with California Modulars local area representative.
- Permit and other City fees (San Jose/Santa Clara estimate coming soon)
- Soils Engineering (typically not required)
- Landscaping Design or Install (typically not required
- Fire sprinklers
ADU Return on Investment
More importantly, it typically pays, and pays well to build an ADU in your Bay Area, CA backyard. This is because
- The land is (basically) free
- Financing is available and relatively inexpensive
- Rents are high in Bay Area,California
- California Modulars ADU models provide cost and schedule predictability
We ran a detailed financial projection on building, financing and renting out our 1 Bedroom, 1 Bath, ADU Ridgeline 400 Model in San Jose and the returns were very promising.
The projected rent for the 400 sq. ft. unit is $1,554/month
The all-in cost to build this (fully loaded) ADU is projected at $161,358, which sounds like a lot, but when financed at 90% Loan to Cost, creates a monthly payment of $560 on a 30 year period.
So, after the projected monthly loan payment, increase in property taxes and insurance, plus a few other expenses, the anticipated net return is $900/month. A nice bit of cash for letting go of part of your backyard.
If this sounds interesting and you think you have a viable property, please contact us to get you started on your ADU building process.
If you don’t have the cash to build an ADU or you don’t have enough equity in your home to do a Home Equity Line of Credit, a Renovation Loan might be the best way to finance your ADU.
A Home Equity Line of Credit “HELOC” has limitations. If your home is currently worth $500,000 and you owe $350,000 on your current mortgage. Most banks will lend up to 80% of the current value, or $400,000. This leaves only $50,000 available to build the ADU.
A great alternative to this is a renovation loan. Renovation loan appraisals are based on the “As-Completed” value of the home. So if the home will be worth $550,000 once the ADU is complete, the renovation loan will lend up to 95% of the “As-Completed” value, or $522,500. This gives you $172,500 available to build the ADU.
Knowing the high price of real estate in Bay Area, California this opens up a lot of opportunities to finance much or all of the cost of your backyard home.
We have partnered with lenders that specialize in delivering the best options for financing your ADU. Fill out the form below to have our preferred lender contact you with some options.
PREFERRED FINANCE PARTNERS
1333 N California Blvd
Walnut Creek CA 94596