What’s Driving ADUs

Who Should Consider Adding a Granny Flat (ADU)

California enacted recent changes to Accessory Dwelling Units (ADU) in 2017 in response to the housing crisis experienced throughout California.  Also known as granny flats, the statewide mandate changes removed barriers making  ADUs viable and more affordable.

Renovation loans can finance income property additions including ADUs.

Who is looking for ADUs?

From millennial's to baby boomers, the severe housing shortage has become a significant impact on affordable long-term housing.  Rent costs continue to escalate.  Home values are rising faster.  The sacrifice of disproportionate rent makes saving for that home down payment insurmountable.

Baby Boomers

Baby Boomers need to take their next step as they enter retirement. Ideally, it means to stop working and live on fixed income. Healthcare and affordable long-term housing needs are paramount and the highest concern. The good news of living longer is dampen by financing it. Some of the choices are hard. Planning out housing may mean to relocate to more affordable geographies both domestically or internationally. It will certainly impact your lifestyle. For Baby Boomers, ADUs can present a couple of opportunities. A baby boomer can add an ADU to create rental income to supplement overall income. Rent out you current dwelling. You maximize your rental income by downsizing and move into the new ADU. Alternatively you can rent the new ADU to create attractive supplemental rental income.

Take Care of Family

Even homeowners worry when family members struggle for housing needs.  Parents entering retirement may struggle financially.  The struggle of siblings or returning adults may need temporary assistance.  There may be family members with impairments that have special long-term needs that are safe, accessible and affordable. 
ADUs can be a solution.  A 600 sq. ft. ADUs can cost around $120,000 that incurs $800 a month increase to your current mortgage payment.  The net effect is 1 bedroom unit is costing you $800 per month.  The market for a one bedroom apartment rental in San Diego is currently averaging $1,500.00.  That's affordable long-term housing.

​Create Income
Real Estate investing is a proven strategy to building wealth.  In the current marketplace has favorable build costs compared to current property value.  Consider building new construction utilizing rental-grade improvements.  Your costs could range at $200 a sq. ft.  The average current market value in San Diego is $449.00 sq. ft.  Savvy real estate investors capitalize on this delta all day long.   ADUs can put any homeowner in the real estate investment game to create long term rental income.

Why ADUs now?

Never has been a better time.  These changes results in major cost reductions.  Removal of off street parking, utilizing existing plumbing/gas/electrical services and major reduction in permit fees translates into saving of tens of thousands of dollars. 

  • Off street parking not required within  a 1/2 mile of public transportation
  • Utilize existing services from main dwelling (electrical, plumbing & gas)
  • Sprinklers only required when present in main dwelling
  • Reduction of permit fees proportional to ADU

Garage conversion ballpark cost are around $80,000.  New construction costs for granny flats start around $120,000.

We Can Help

We have a team of professionals to assist every step of the way. From a free initial consultation to financing, planning to construction, we have a coordinated process from an experienced team with you every step of the way. ​Meet our experts to fully understand your needs. We’ll explore the best financing that meets your financial goals. Our Feasibility will evaluate your site, develop plans, determine budget and timeline to completion. Our expertise and teamwork will come in on time and on budget.

Schedule a Free Consultation

  • Renovation Loans
  • Plans
  • Resources: Architects, Contractors, Lender…
Get your questions answered.

Complete the request below to schedule a free phone consultation.

Will Johnson

Will Johnson, portrait 2022

Loan Originator NMLS# 2109577

Mobile: 619.295.9455


Equal Housing Opportunity icon
Ridge Capital Group NMLS #1730019.  This advertisement is for general information only.  Some products may not be available in all licensed locations.  Information is subject to change without prior notice at the sole discretion of Ridge Capital Group.  All loan programs are subject to borrowers meeting appropriate underwriting conditions.  This is not a commitment to lend.  Other restrictions apply. Will Johnson – NMLS# 2109577,  DRE # 02207239