Features Overview

The right ADU for each situation varies, both in terms of the design, the construction type (modular/manufactured versus stick built), and the way the ADU blends with the home. Finding the right design for your ADU can ensure that you get the best financial outcomes and provide the best quality of life for the individual living in the ADU.

Manufactured versus Stick Built

One of the first big questions you will encounter is whether to construct a manufactured or stick-built ADU. Most contractors that build ADUs will specialize in one or the other, so you should have an answer to this question before attempting to locate a contractor.

Generally speaking, the fully realized cost for both manufactured and stick built ADUs is about the same per square foot basis given the same overall quality. The biggest tradeoff to consider is time versus equity value; a modular or manufactured ADU can be ready to go in 3-5 months with minimally invasive construction, whereas stick built units usually take 6 months to a year to construct, and construction can be highly invasive. On the other hand, the equity value of a stick-built unit is usually higher than for modular housing due to quality differences, personalization, and stigma. Stick-built units also give you the opportunity to hire an architect and personalize the ADU given site constraints, which means that in some instances a stick-built design will be the only option.

While each has its merits, we generally recommend the following;

• For an ADU you plan to rent, choose a modular or manufactured unit. The time that you will save will significantly increase your return from an investment perspective and you will likely endure fewer construction headaches. Given the right conditions, you also may be able to lower your construction costs. There are many cool, modern looking manufactured ADUs on the market, and some of these companies may offer you financing. You should be wary of some of these companies, but many offer exceptional products. Alternatively, a number of very established companies offer more traditional looking homes. You should also be wary of these companies, manufactured homes have earned a reputation for a reason.

  Purchasing a modular or manufactured unit is often like buying a used car, with high pressure sales tactics, hidden commissions, and scams. Quality varies widely. You should do your research before reaching out, and look at multiple options so that you know what sort of deal to expect. Often reaching out to the right contractor or advocate BEFORE contacting the company can connect you directly to the manufacturer, without going through a dealership or sales person. Dealers/Sales agents usually take a 20+% cut, the right connections therefore could save you more than $40,000!

• For an ADU on very high end properties, a specific use, or unique constraints, choose stick-built. If you can find a manufactured unit that fits your precise needs, it may not hurt to chose a manufactured unit. But often, for very high value properties, specific uses, or site specific constraints, stick built projects are best.

  Very High Value Properties: For very high value properties, the value of a stick-built ADU will maximize the value of the main home. A comparable quality to very high value construction is not available in manufactured and modular products, so a manufactured or modular product may not fetch top dollar in resale.

  Specific Uses: Some uses require unique designs. While you are the best judge of whether the available manufactured and modular designs will work for your particular use, be aware that manufactured and modular homes generally are built to be “homes” and their building approval requirements usually require them to be wholly self contained. For some uses certain components of a home are not necessary; for instance if using the ADU as a Child’s bedroom or a “man cave” a complete kitchen is not necessary. A stick-built ADU without a kitchen will be significantly less expensive than a modular ADU with a kitchen. Depending on your use, it may be possible to share HVAC, kitchen, utilities, bathrooms, and more, which could save a significant amount of money.

  Unique Constraints: Oftentimes constraints specific to the site require stick-built construction. In many hillside areas, narrow road widths prevent trucks and cranes from accessing the site so delivery of a modular unit is impossible. In other areas, overhead electrical wires and lack of access make it impossible to set an ADU. Finally, most manufactured and modular products have specific, rectangular sizes. On some sites the optimal design may be non-rectangular, which may necessitate stick-built construction.

Thoughtful Design

Design of the ADU is extremely important, regardless of your intended use, because the smaller size requires more thoughtful use of space. If you are renting out the unit, it is especially important that you pay attention to features renters will pay more for.

When renting a unit, renters pay most for visible features that they cannot get in nearby rentals. So what can you do cheaply to make the unit better than comparable rentals in your area? Most apartments and new homes are designed for an “average” person. Because these buildings are mass marketed, they have to appeal to the broadest swath of interested parties. BUT, since you only have one unit (or two with a JADU) you should instead design the unit for your ideal tenant. By doing this, you can more easily get a tenant with certain characteristics, and achieve the highest rental rates.

In some cases, we may even be able to pair homeowners up with exceptionally good renters prior to construction. Given the relatively short construction time and approval process, the tenant and homeowner may be able to design the unit together. Exceptionally good tenants may front some design and construction costs, and a variety of different legal arrangements can make it possible to share some of the ADUs value with the tenant. Tenants will pay considerably more for a unit they had a hand in designing.

Creating an ideal space for tenants is key to getting top dollar in the rental market. Very good looking ADUs can fetch as much as a thousand dollars a month more in rent. Some of the most important components of a top dollar ADU are:

• Quaint Modern Cottage/Cabin Appearance: Most new “luxury” apartment buildings feature a very minimalist modern appearance. Rather than compete with those new buildings, emphasize the characteristics that make living in an ADU special by building a natural oasis. ADUs allow for outdoor space and cater to people that want a quaint living environment. As an added bonus, people that like a quant living space are much more likely to be homebodies that do not throw parties and are respectful of your property. A smaller size also means less up-front costs and more backyard space. Due to the popularity of “tiny home” shows, often the best return will be on a ADU that is smaller than you might think!

• Kitchen Space: Kitchen space is limited in most rentals because building kitchen space is expensive. But for modular and manufactured units, kitchen space is cheap relative to stick-built apartments. You will be able to capitalize on a superior kitchen with higher rents. Ensure that there is a large amount of countertop space and invest in high quality appliances. One Note: Most kitchen savvy people prefer gas ranges and you will struggle to get the highest rents without one. But adding gas to your ADU can be costly and delay the process of getting approvals. One option is to consider adding an induction cook top and provide an outdoor propane gas grill as a substitute; you and your contractor determine a gas connection isn’t worth the effort.

• Built In Features: Built in features are important for making the small size of an ADU feel larger than it is. Modular and manufactured homes usually will come with a package offering more built in features; choose the package with more, especially when it comes to storage space. Most ADUs can be lifted off the ground 2-3 feet providing a below unit crawlspace/storage area.

• Outdoor Space: Most apartments come with a 3 foot by 5 foot balcony far off the ground. Even new homes are being built with no yard or outdoor space. Quality outdoor space is the easiest and least expensive way to attract the best tenants. Invest in a rooftop deck if it is permitted in you city, create a separate patio space for the ADU, and use landscaping to create an elegant entrance for the ADU. Great landscaping can also give privacy and autonomy to the tenant (see pairing the ADU with the home below).

• Lighting: Lighting is essential for the best presentation of the unit, but many modular and manufactured homes have poor lighting design. Additionally, since ADUs are often cramped behind the main home they are shaded from the sun and can feel dark. If a better lighting package is available from the modular or manufactured home seller, consider investing in the upgrade. Otherwise, you can cheaply add lights on your own using lamps and stick on LED strips. Pro Tip: Turn all the lights on before showing the unit to tenants and in photos.

• In Unit Washer/Dryer: To get the best tenants, providing a washer dryer is essential, but it can be expensive. To save money, consider attaching the main home to the ADU through a shared laundry room or relocating your laundry room so that it can be accessed by the tenant.

• Parking: Even though parking isn’t required where there is access to transit, in neighborhoods with tight parking an off-street parking spot is crucial and could be worth $100-300 a month. Be creative with your parking situation; you may be able to add the ADU or a rooftop patio above the garage.

Renters don’t pay for invisible features;

• Energy efficiency is not important for renters. Even if the tenant pays the utility bill, they will NOT base their living decision on utilities costs. If you want to benefit from installing an energy efficient unit (especially since many modular and manufactured units are very efficient), include the utility costs in the monthly rental cost.

• Nicer carpet pads, better cabinets, high quality windows (but not window size!), better outlets, moulding/trims, and other upgrades offered by manufactured housing companies are generally unimportant to tenants.

Pairing the ADU with the Home

Ensuring that the ADU matches and compliments the home is important to enhance the unit’s rentability and resale value. Future homeowners may not want to rent the ADU to tenants or may want to rent it out while you did not. Therefore it is important to build an ADU for a variety of uses by designing a multifunctional space. Additionally, getting the aesthetics of the ADU to match the main home’s aesthetics both inside and out is crucial, since future purchasers generally prefer consistent finishes and color palates across the property (note this is especially true if building a Junior ADU).

Building an Attached or Detached Unit: Often the question arises of whether to build an attached or detached ADU. The answer generally varies by city and lot since, some cities may require you to add a ten to twenty foot space between the ADU and your home, making it impossible to build the largest ADU permitted on your lot as a detached unit. For resale value, usable attached square footage is generally worth more than detached square footage in an ADU, however, for rentals detached units generally fetch higher income.

Some of the best options for connecting the ADU to the home include: creating a veranda or landscaping that creates a feeling of being inside while actually being open, connect the ADU through a low traffic area of the home such as a mud room or laundry room, or face most of the ADU’s window towards the rear of the property and build the ADU along the side of your home divide your rear yard to create two private outdoor spaces.

Other Important Things to Consider:

• Color and themes

• Parking location and articulation

• Entry and Exit for the ADU

• Architectural style

• Landscaping (Patio or Veranda)