When you are building a house, having a home renovated, or having repair work done on your home, the most important matter is arguably paying for the work at hand.

In the world of construction there are different payment models that determine how money gets from the client to the builder. Here we will go into how builders get paid for their hard work.

Construction Contracts: Types and Payment Terms

There are different types of construction contracts such as lump-sum, cost-plus, time & materials, and unit pricing. Lump-sum payments, where builders get a set fee for the entire project. A cost-plus contract is where the contractor is paid separately for the materials and then their negotiated fee.

Time & materials is where the contractor is paid separately for their, as the name implies, time and the cost of materials. These agreements clarify the project scope and expectations, ensuring both parties understand the financial commitments involved.

Builder’s Invoices and Progress Claims

Invoices are critical for keeping track of payments. Builders use invoices and progress claims to keep track of when work has been rendered and paid for. Invoices detail the work completed and the amount of money owed.

A process claim is a request for payment based on the present status of the project. Utilizing this system ensures that builders have a steady cash flow, which in turn ensures project momentum is maintained while covering the ongoing costs.

Payment Schedules and Milestones

Project milestones determine the ultimate payment schedule. When a phase of the project is completed, a portion of the total payment is released to the builder. This system ensures that payments are handled in a timely manner in direct correlation to the progress made.

It also serves as an incentive for the builder to work in a timely manner. Some home builders in Los Angeles may offer additional payment offers in the name of being more flexible as a means of gaining an advantage over their competition.

Cost-Plus Contracts vs Fixed-Price Contracts

There are different pros and cons offered by cost-plus and fixed-price contracts. A cost-plus contract allows for payment of the actual costs of the project in addition to a profit margin. This is good when the scope of a project is difficult to determine.

A fixed-price contract has a set price, no matter what the ultimate cost of the project turns out to be. This is the preferred method when there is a need for a concrete and clear budget. Each contract type will influence the builder’s costs and profit margin.

Retainage in Construction Payments

Retainage is where a portion of payment is held until the project has been completed. This is to ensure that the project, whether it’s a remodel or a new construction in Los Angeles, has been completed to full satisfaction.

This affects the amount that the builders and subcontractors receive. Think of it as a type of security deposit for the client, should the finished work prove to be unsatisfactory.

Mechanic’s Liens and Payment Security

A mechanic’s lien is a legal tool used by builders in order to secure payment. If for whatever reason a builder isn’t paid then they are able to file a lien against the property the project pertained to.

This makes sure that they will be compensated for their work. In order for this process to work, there must be legal documentation that is filed within specific timelines. This is an essential security measure for builders.

Change Orders and Additional Work Payments

A change order is simply an update or additional to a project plan that can affect both the scope and cost of the project. Keeping track of these changes through documentation is essential to ensuring that there is clarity and understanding on any new work items.

This process can cause an increase in the cost of the project, and it may also require additional service charges. This can have major implications on the overall financial plan.

Escrow Accounts in Building Projects

Escrow is a critical element in the payment process. Funds are held securely in escrow until specific phases of the project are completed. This system is beneficial to builders, suppliers, and clients because it assures that money is released under terms that all parties have agreed upon.

This guarantees builders that their payment will be received upon milestone completions while both clients and suppliers get protection from potential non-fulfillment of obligations.

Construction Payment Disputes and Resolution

An unfortunate possibility is that of a payment dispute. A payment dispute in construction often occurs due to misunderstandings and disagreements over the scope of a project, quality disparities, or cost.

In order to resolve such disputes involves negotiation, mediation, or, if things go far enough, arbitration. That final step ensures privacy and continued professionalism. In order to prevent such disputes here need to be clearly defined contracts and open conversations among all parties.

Pre-construction Services and Payment

If you want your construction project to go smoothly then you need pre-construction. Pre-construction includes project assessment, feasibility, studies, and design work.

These services often require upfront payment and can have a major impact on the project’s financial plan. Investing in pre-construction services can help you better manage your time and reduce potential risks during the building phase. Omitting pre-construction services could lead to major regret.

Direct Costs, Indirect Costs, and Profit Margins

Direct costs are any expenses that go directly towards the building work. Labor and materials are direct costs. Meanwhile, indirect costs include office rentals, utilities, and other forms of overhead. Builders will calculate the profit margins by assessing the costs and adding in a desired profit percentage.

Digital Payment Solutions for Builders

Digital payment solutions are becoming more and more prevalent in the workforce, and the construction industry is no different. Digital payment solutions offer greater ease and more robust security measures which streamline transactions while reducing the risk of error or fraud.

They can also significantly improve efficiency when managing finances and also provide real-time payment tracking. This will increase the transparency of the payment process.

Conclusion

Knowing payment structures is essential for builders to maintain their financial stability and overall quality and success of projects.

By maintaining efficient payment processes, the construction industry will continue to be a healthy one. Builders who adhere to their contracts and remain steadfast in their work will be able to maintain financial stability. 

Sources

First Merchants Bank. (n.d.). How does my builder get paid? Retrieved January 21, 2025, from https://www.firstmerchants.com/personal/borrowing/mortgages/compare-mortgages/construction-loans/how-does-my-builder-get-paid

National Association of Home Builders (NAHB). (n.d.). How do builders charge for their services. Retrieved January 21, 2025, from https://www.nahb.org/subsites/log-homes/buyers-guide/building-your-team-pages/how-do-builders-charge-for-their-services

Levelset. (n.d.). Guide to getting paid for construction work. Retrieved January 21, 2025, from https://www.levelset.com/blog/guide-getting-paid-construction-work/

It goes without saying that building a home is an expensive process. There are a tremendous number of factors at play that can determine the final cost. Everything from the land you build on, the materials, labor, and permits can have a major effect on the final price tag of your custom home.

If you feel that you are ready for the major undertaking of building your own home with the best home builder in LA, then here you will find what the most expensive parts are, and how each individual cost is determined.

The Price of Foundation Construction

The most critical element of building a home is the foundation because it supports the entire structure of the home. The price of foundations can vary greatly because of the location. The location you have chosen for your house may have a soft soil type that requires the foundation to run deeper than normal.

You may have to treat the soil to make it more stable for supporting your home. You can expect to pay anywhere from $5 to nearly $40 per square foot, and this is excluding a concrete slab or the inclusion of a basement.

Analyzing Framing Expenses

Framing is another foundational element of building your home. It is essentially constructing your home’s skeleton and requires great care.

The materials, whether wood or metal, are a significant cost factor, as is the labor. A home’s framing can cost anywhere from $7 to $16 per square foot. 

Roofing: A Major Cost Contributor

The price of roofing varies. The technique utilized, the materials used, and the time it takes to install can all greatly affect the cost.

If you are installing a roof with standard asphalt shingles, you can expect to pay between $3.40 to $6 per square foot. Metal roofing can run you from $6 to $25 per square foot. A tile roof can go from $6.30 to $12.30 per square food. 

The complexity of the roof’s design is also a major determining factor for the final cost.

Plumbing System Complexity

There was a time when it was possible to build a home without plumbing. That time was called The Dark Ages for a reason. A home’s plumbing system is one of the most important elements, and it is understandable that such an integral part of a home’s operation may be costly.

Of course the size and complexity of your home is the ultimate determining factor of the price you will pay, but an average 2,000 square foot home will typically cost $4.50 per square foot.

The Costly Electrical System

If a plumbing system is intricate, then an electrical one is moreso. Electrical work requires a meticulous professional to ensure that everything is safe and up to code. For this reason, you can expect to pay between $4 and $9 per square foot.

HVAC System Investment

Heating, ventilation, and air conditioning (HVAC) installation can get expensive, but it is critical for the comfort of your home. Installing a new HVAC system will typically set you back between $5,000 and $13,000.

This is quite expensive, but if you opt for a system that has high energy efficiency, then you can expect to see a decrease in your monthly energy bills.

Interior Finishes and Fixtures: The Devil Is in the Details

Your home’s interior finishes and fixtures are where its interior identity really begins to form. Interior finishes and fixtures consist of paint, carpet, cabinets, and lighting.

The price will vary from element to element and if you are opting for as much customization as possible, then you will find yourself spending more money.

The Expense of Windows and Doors

Doors and windows may not seem like a big deal, but they are an unsung hero for the style of your home, both on the inside and outside. Payne thickness is a major determining factor for window cost, along with the material.

You can expect to spend anywhere between $280 to $1600 for a new window. As for doors, materials and design are also major factors. You can expect to pay between $500 to $5000.

Choosing Flooring: Balancing Cost and Style

Installing flooring in a new home can typically cost between $2 to $20 per square foot.

Of course there are other determining factors such as flooring materials, flooring patterns, square footage, and labor costs to be considered. Carpeting adds to the expense as well, costing $2 to $9 per square foot.

Fitting Out the Kitchen and Bathrooms

Kitchens and bathrooms are functionally the most important rooms in your home. Plumbing and electrical are particularly important in these rooms, but there are other factors at play.

The cost of vanities, lighting fixtures, sinks, showers, and countertops will all impact the final cost.

Labor Costs

The cost of labor varies greatly from one state to another, so this is something that you will need to do some major research on. Look up what you can expect to pay carpenters, electricians, and plumbers in your specific area.

Call around and get quotes where you can. Compare different service providers so you can find the best deal for you.

Architectural and Design Fees: The Cost of Expertise

Good design is worth the amount that you pay for because it will ultimately make your home more enjoyable to live in. An interior designer can run you anywhere from $200 to tens of thousands of dollars.

Good design is important and can make your house more enjoyable to live in. Architects and designers charge fees for their work, and this adds to the cost of building a house. Investing in a good design helps make sure your home is both beautiful and works well for your needs.

Permitting: The Unseen Costs

A home construction permit can run you anywhere from $500 to $3,000. It can certainly get more expensive, but that is a typical ballpark figure for a standard sized family home. The process of getting your permits can be time consuming, but it is an absolute necessity.

Material Costs Fluctuation: A Market-Dependent Variable

The problem with gauging the price of materials is that they are always in a state of fluctuation. This is because the market is always in a state of fluctuation. This makes it difficult to keep a set number on how much you can expect to pay for materials.

This is why it is important to keep in mind ballpark estimates of how much prices could increase based on how they have increased in the past so that you can plan accordingly.

Landscaping: More Than Just Aesthetics

Landscaping is critical to your home’s visual identity. The arrangement of plants, trees, and even the pattern in which your lawn is mowed speaks volumes about both you and your home.

It needs to be said that landscaping adds a bit of cost to your new home, ranging from $1,500 to $5,000 for new installations. However, good quality landscaping can add long term value to your home.

Insulation and Energy Efficiency Features Pay Off

One of the most important installations in your home that will ultimately save you money when your energy bill rolls in is insulation, along with other energy-efficient features.

Depending on the material, insulation can cost between $0.50 to $4.50 per square foot. You can also install energy efficient appliances to lessen your monthly bills.

Luxury Upgrades and Customization Costs

Customization is one of the ways that you can make your home utterly unique. Custom furniture, tiles, cabinetry, if you can think of it then it can be customized.

However, custom features can get quite expensive and pricing will depend purely on who you commission. The same goes for any luxury upgrades you are looking to make.

Home Automation and Smart Technology: Tomorrow’s House Today

Smart homes are all the rage these days, with Bluetooth technology making it possible to control  your lighting, heat, security, system, and even your fridge…all from your smart phone!

While these systems can be costly to implement and are not a strict necessity, they will certainly add a whole new level of convenience to your house.

Conclusion

Building a house has numerous costly parts, from the foundation to smart technology. Being forewarned about these costs will make you forearmed when you are putting your budget together.

It is important to remember to talk to the best custom home builder in Los Angeles who can give you more precise estimates so that you can put together a realistic budget with as few nasty surprises as possible.

Remember, knowing where each dollar goes can help you make the best choices for your new home.

Sources

Bankrate. (n.d.). Cost to build a house. Retrieved January 21, 2025, from https://www.bankrate.com/real-estate/cost-to-build-house/

Architectural Digest. (n.d.). How much does it cost to build a house? Retrieved January 21, 2025, from https://www.architecturaldigest.com/story/how-much-does-it-cost-to-build-a-house

The Spruce. (n.d.). How much does it cost to build a house? Retrieved January 21, 2025, from https://www.thespruce.com/how-much-does-it-cost-to-build-a-house-8610136

Accessory Dwelling Units (ADAs) have become a popular and important solution to the housing shortage faced by the state of California. Here we’ll explore size limit laws in California for ADUs and how those laws vary across the state. 

What Is An ADU?

An ADU is a secondary housing unit that is located on a single-family lot. They can be attached to the main dwelling, converted from a former garage, or be completely detached from the main dwelling. ADUs are a clever solution that has been utilized to address the housing shortage that California (and other US States) has faced by allowing homeowners to place an additional dwelling on their property and rent it out. It needs to be understood that an ADU is not the same thing as a tiny home, even though it is certainly smaller than most houses. An ADU frequently ranges up to 1,200 square feet, three times the square footage of the average tiny home.

Local Zoning Ordinances and Regulations

It needs to be understood that there is no singular ADU zoning law or ordinance across the state of California. There are different ordinances and zoning regulations in different cities. For example, an ADU in los Angeles will have various changes compared to San Fransisco. These policies determine where ADUs can be built, what size they are, and their design. If you are considering building an ADU then you must familiarize yourself with the ordinances and regulations in your area.

Maximum Allowable Size for ADUs in California

The typical allowed size of an ADU in California is 1,200 square feet. This is not a concrete standard across the state. Different areas in California may allow for different sizes depending on their specific ordinances and regulations. 

Types of ADUs and Their Specific Size Limits

Different types of ADUs have varying size restrictions:

• Detached ADUs have specific size limits and are separate from the main residence.
• Attached ADUs must adhere to size limits that often relate to the proportions of the existing structure.
• Junior ADUs are smaller and usually converted from part of the existing home, with more restrictive size limits.

Setbacks and Lot Coverage Limits

The required distance between structures and property boundaries is referred to as a setback. Coverage limits, on the other hand, determine the On the other hand, lot coverage limits specify the maximum area of the property that can be occupied by buildings. Both these regulations play a crucial role in determining how large an ADU can be and where it can be positioned on the landscape.

Owner Occupancy Requirements

The owner of the properties is required by occupancy laws to reside either in the primary residence or the accessory unit. This can affect eligibility and the feasibility for the owner to construct ADUs as potential rental properties. This requirement is meant as a protection against potentially harmful housing practices.

Building Codes and Safety Standards

ADU construction requires compliance with California building codes. These safety codes are in place to ensure the safety and habitability of ADUs. This should cover everything from emergency egress to structural integrity.

Permit Process and Fees

The process of obtaining a permit for an ADU in California entails several steps and costs. You need to submit a detailed plan and application to the local planning department as your project will fall under their jurisdiction. Your plan must conform to environmental, safety, and zoning guidelines to be approved. If you have any questions then you need to ask your local planning department for any helpful information they can offer.

The cost for obtaining your permit can vary significantly. These often include plan checks, inspections, and building permits. In some, more sensitive, areas you may encounter additional fees for environmental reviews or impact assessments. It all depends on location and scope of your ADU build.

ADU Impact on Property Value and Taxes

Placing an accessory dwelling unit on your property can up your property’s value due to it being an additional living space. In California’s current competitive housing market this could be highly attractive and valuable. Not only could your property values increase, you could bring in additional income by renting out the ADU.

However, you do need to consider the fact that increasing your property value will likely increase your property taxes accordingly. When the accessory unit is added to your property could be a significant increase in price for you to expect to pay. You must calculate this potential increase beforehand in order to assess the potential financial impact on your property.

ADUs As Solution to Affordable Housing Crisis

Accessory dwelling units are now playing a major role in providing affordable housing options to those who are seeking a place to live in California’s highly competitive housing market. This is a case of supply and demand in which there is plenty of demand, but little supply. A property owner can place an additional unit on their lot, making room for more residents, and therefor alleviating the problem. This reduces the scarcity of places to live while enabling the property owner to charge rent for the occupied unit, meaning that over time the unit will practically pay for itself.

Environmental and Neighborhood Impacts of ADUs

Accessory dwelling units make efficient use of existing residential lots and pre-existing infrastructure, which means they provide sustainable housing. This means they lessen the impact on the environment because they require no additional land development. In addition to this, accessory dwelling units enhance the viability of public transportation and reduce the reliance on additional vehicles, which means lower greenhouse gas emissions in the long run. 

That is not to say that the introduction of ADUs is not without its own challenges. The size of the units can alter the visual and social fabric of a community. Having a unit on a piece of property can decrease the appearance of the property size. 

The ADU may also overshadow smaller primary homes or take up outdoor spaces. This can cause privacy concerns along with causing an increase in population density which can potentially strain infrastructure such as sewage, and roads. Because of this the units require careful planning and community engagement to ensure that they are more of a benefit rather than a liability.

Conclusion

Building an ADU on your property can greatly improve its value due to the additional living space that it provides in California’s highly competitive housing market (this is true for other US states that face similar problems). ADUs also offer the potential to generate additional income through renting. The benefits, when planned correctly, outweigh potential issues and prove that accessory dwelling units are an asset worth having. 

By following the aforementioned sizing guidelines and making sure that you are complying with city ordinances, you can better plan for the construction of the accessory dwelling unit on your own California property.

Sources:

California Department of Housing and Community Development. (n.d.). Accessory Dwelling Unit Handbook. Retrieved from https://www.hcd.ca.gov/sites/default/files/docs/policy-and-research/ADUHandbookUpdate.pdf

Maxable. (n.d.). Definitive Guide to California ADU Regulations in 2024. Retrieved from https://maxablespace.com/california-adu-regulations-2024/

Levi Design Build. (n.d.). ADU Size Limits in California: Minimum & Maximum ADU Sizes. Retrieved from https://leviconstruction.com/adu-size-limits-in-california-minimum-maximum-adu-sizes/

GreatBuildz. (n.d.). New ADU Laws for 2024 – A Comprehensive Guide. Retrieved from https://www.greatbuildz.com/blog/new-california-adu-laws/

Renee White Team. (n.d.). The New ADU Laws In California (UPDATE 2024 Explained). Retrieved from https://www.reneewhiteteam.com/guides/new-adu-laws-bill-california-ca/

An ADU (accessible dwelling unit) can be a major benefit for a property owner. It is an independent residential unit located on the same property as a main dwelling. This provides a flexible living space that can be used as a rental property or within property owner’s relatives. 

These properties bring great potential for the property owner to generate additional income through renting, which can help offset mortgage costs or other expenses. And units can also greatly improve the overall value of a property. 

However, because these units can add both value and income for the property owner it’s understandable that there is an effect on the property owners tax situation. Here we will navigate the changes the property owner can expect to their taxes from their accessible dwelling unit. 

Property Value and Tax Assessment

Adding an ADU can affect your property taxes due to the assessed increase in value to a property. A property’s market value is what determines one’s property tax, so adding a unit will increase that value, particularly if the property owner is drawing income from the unit. When an ADU is constructed a new assessment of the property is required to reflect the added value. This means that while the construction of the unit can be a major benefit, it will likely lead to higher property taxes. 

California’s Stance on ADUs and Property Tax

The state of California has been going through a major housing crisis and as a result they have been promoting and encouraging the use of accessory dwelling units as a solution. They have passed legislation streamlining the process of obtaining permits for homeowners to build them. They have also removed roadblocks for homeowners to be able to place the units on their property at reduced costs. However, there have not been any changes in California tax law to accommodate these property additions.

The Tax Implications of Building an ADU

There are numerous tax implications that need to be considered if you are going to place an ADU on your property. There are construction costs, and the potential earned income from renting it out. If you took out a loan to build your unit, depending on your local laws, some of those costs may be deductible. It is critical that you speak with a tax professional to understand and prepare for any possible deductions or any possible increases and property taxes.

The Income Potential: Renting Out Your ADU

Renting out your ADU can be a significant boost to your income. However, this boost in income is federally taxable and needs to be considered. It is possible that you can use a portion of the money gained through renting the property out to offset the increased tax payment. This is especially true if you live in an area where housing is in strong demand. However, It is important to speak with a tax professional who may be able to help you navigate how you can maximize your properties benefits while offsetting the new tax burden.

Harvesting Tax Benefits and Credits

It needs to be understood that there are also potential tax benefits and credits available to property owners. Such incentives can include deductions on construction related costs, property tax exclusions, and additional tax credits for installing energy efficient systems such as solar panels. 

If you wish to take advantage of these potential benefits then you need to be sure that you meet the specific criteria sent by tax authorities, which can vary depending on where you live. This is yet another matter which you should discuss with a tax expert. An expert will be able to help you take advantage of every possible benefit that could beat your disposal and help you prevent having to pay any unnecessary taxes that may accrue.

A Comparative Analysis of ADU Property Tax Increases

The way that putting an ADU on your property can affect your property taxes very significantly in different jurisdictions. In the high property value areas such as California, you can expect a significant increase in property taxes indicated by the high rates of assessment in that area. Areas with lower property values will likely have a significantly lower. The location of your property is one of the most important determining factors.

Real-world Impact: Tax Changes Post ADU Development

If you wish to gain a working understanding of what to expect from your property taxes after developing an ADU, then you should explore real world case studies that provide concrete data. For example, you may find that a homeowner who installed a unit might see a moderate property tax increase, but that increase is offset thanks to rental income generated by the unit. 

Meanwhile, a homeowner in a high cost urban area will most likely experience a significant tax increase, but there are more benefits to be gained thanks to high rental demand. You are more likely to end up in profit than out of pocket. These insights are critical for your decision-making process.

If Taxes Go Up: The Appeals Process

If building an ADU has caused you to face the significant increase in your property taxes, the good news is that you have the ability to appeal the tax reassessment. You can start the process by filing an appeal with your local county. After you have received your assessment notice.

In order to have a successful appeal you need to gather all of the relevant documentation. This means gathering construction costs, permits, and comparisons of similar property assessments in your area. In bigger cities, things become more complex. Historic districts and other specific areas can be oddly different. Your preparation is to get details for a favorable outcome in the process.

Conclusion

By utilizing the information we have just covered, you will be better prepared to deal with the potential tax implications of your ADU. Understanding the laws and regulations of your area will help you avoid being blindsided by your If you are in need of more in-depth and detailed advice then you should consult a tax expert who can further break down all relevant information that you will need.

As one of the most coveted ADU builders in Los Angeles, we would be proud to take a look at your project and help guide you down the correct paths.

Sources

1. Sierra Madre City Agency. (n.d.). Property tax assessment and ADUs. Retrieved from https://www.cityofsierramadre.com/
2. California Department of Housing and Community Development (HCD). (n.d.). California’s legislation on ADUs. Retrieved from https://www.hcd.ca.gov/
3. Los Angeles County Assessor. (n.d.). Property tax implications of ADU construction. Retrieved from https://assessor.lacounty.gov/

Introduction to ADU Grants in California

In the state of California, accessory dwelling units (better known as ADUs) I’ve become an incredibly popular option to combat housing scarcity. ADUs are small business units located on the same property lot as a main dwelling. It is not uncommon for property owners to rent out these units. 

Because of the housing and communal benefits offered by accessory dwelling units, the state of California has implemented grant programs as a means of promoting affordable housing. These grants help homeowners, developers and contractors to cover the costs associated with building the units. Here is information about the grant programs.

What Are California’s ADU Grant Programs?

California’s grant programs for accessory dwelling units are government initiatives to sponsor the construction or renovation of ADUs. The ultimate goal of this initiative is to alleviate the problems caused by the housing crisis currently afflicting California. These grants take the form of outright grants that do not need to be paid back, or favored loans which have lowered interest rates and in some cases deferred fees. These grants make it feasible for property owners to install ADUs on their property, and therefore alleviate the problems caused by the housing scarcity in the state.

Understanding Eligibility Requirements for California ADU Grants

There are certain criteria that applicants must meet if they wish to qualify for an ADU Grant in California. There are limits on income which are often set so that those with lower to moderate income households will be prioritized.

Homeowners and developers who are looking to construct multiple units on a larger scale can also apply for these grants. It is important that you understand the eligibility requirements to receive funding as if your application does not align with the intended goals of the grant then you may be deemed ineligible. 

Detailed Income Criteria for Grant Qualification

The ADU grant programs are designed specifically to benefit those who are the most in need. Be eligible for a grant the applicant must be within a certain income bracket, typically set by the area median income adjusted for family size. Geographic location and the cost of living in different areas are factors that can severely impact the eligibility for the grant.

Types of ADUs Covered By the California Grant Program

It needs to be understood that the California ADU Grant Program caters to different types of accessory dwelling units in order to meet the diverse means of housing and property configuration. There are three primary types of ADUS that are used, and each type has its own advantage.

Detached ADUs

These units are standalone, meaning that they are separate from the primary residence on the property. This type of unit has the benefit of removing any feeling like the occupant is a resident in your primary home, allowing privacy for both you and the occupant.

Attached ADUs

These units are physically attached to the primary residence on the property. While it ill enable you to keep an eye on the condition of the unit, some may feel that an attached unit turns the occupant into a cohabitant instead.

Garage Conversions

These units are former garages that have been converted into a habitable living space. These options give homeowners flexibility to choose a unit that best suits their housing strategy and property type. However, some may feel that the occupant of this space is less of a tenant and more of a housemate, which may not be the ideal circumstance for many.

Understand that each unit type has its own associated costs, advantages, and disadvantages, so make sure that you plan accordingly when submitting your application.

The Application Process

Gather Information

You need to first understand the requirements of the grant program, including the eligible unit types and any criteria centered around income. Learn about any requirements or potential roadblocks that can prevent your eligibility for receiving the grant.

Documentation

Once you understand the requirements, you need to gather the proper documentation including proof of income, your plans for the unit, and proof of property ownership. Not having the right documents is a quick way to ensure that you do not receive grant approval.

Submission

Submit the now complete application to the proper designated state or local agency that handles the applications and fund disbursement. Make sure that you have paid careful attention to every detail to ensure that you have met all eligible criteria that all documentation is at work. If you find the process overwhelming then you can find workers at the agency you are applying through who will likely be able to help you navigate the process.

Funding Available and Limitations of the Grant Program

The maximum amount of funding allocated to applicants varies. The amount allocated is determined by several factors, including the applicant’s financial need paired with the costs of the project. There are, however, limitations and certain conditions to how the funds be utilized.

Any money must most commonly be applied towards construction costs, such as labor and materials and cannot be used for any unrelated expenses. Recipients may also be required to complete their unit on a set deadline and also comply with local building codes and zoning requirements.

Assessing the Benefits of Building an ADU

There are numerous personal benefits for homeowners to build a unit, including potential income gained through renting the unit as well as the unit increasing property value. ADUs are also beneficial because they help to alleviate some of the problems affecting the state of California caused by the current competitive housing market. This not only helps people be able to find affordable living spaces, it diversifies communities while also stabilizing them. 

State and Local Agency Oversight of ADU Grants

State and local agencies are often responsible for setting the guidelines as well as processing grant applications while ensuring that the grant funds are used appropriately. Provide online resources, information workshops, and even direct support to applicants who may find the process fusing or overwhelming. Such oversight helps to ensure that the grants are used in a manner which achieves the intended goal of the ADU program.

Exploring Partnership Programs for ADU Financing

Sometimes the grant themselves are not quite enough to cover the full scope of a project. For this reason there are partnership programs between the government and private organizations. These collaborations are typically with non-profit organizations, housing agencies, and financial institutions which offer grants, loans, or matched funding. This increases the availability and access of funds for potential unit builders while simultaneously fostering community through diverse housing solutions.

Real-life Impact: Case Studies of Successful ADU Grant Recipients

If you wish to receive valuable insight into the practical benefits and challenges of ADU projects, the best thing you can do is learn about real life case studies of successful grant recipients. Such stories can give you an idea of how to navigate funding, regulatory hurdles, and construction of your unit. There is a wealth of knowledge to be gained from people who have gone through and completed the process that you are just beginning. 

Understanding the Timeline for ADU Grant Reviews and Approvals

You need to have a realistic understanding of how long you can expect to wait for your grant review and approval to go through. The complexity of your application is a major factor and you must be willing to wait for several weeks up to even a few months for processing time. There is no way to truly expedite the process, however you can prevent the process from taking an excessively long time by making sure that your application is complete and completely accurate before submitting it. Make sure that you are adhering to the required specifications and that you are in consistent contact with the agency you applied through in order to address any problems in a timely manner.

Final Thoughts: Ensuring Qualification for a California ADU Grant

Remember, you need to thoroughly prepare and comply with all pertinent regulations when you apply for your ADU grant. You need to be sure that your income and project documentation is in order and accurate so that you do not jeopardize your eligibility.

Make sure that you are aware of local zoning laws. Make sure to remember to tap into any community resources that may be at your disposal and to reach out to any available guidance from local experts. By following these steps you can greatly improve your chances of securing not only your grant, but a professional ADU build, and on budget.

Sources

Here are some credible sources in APA style for your content on who qualifies for California ADU grants:

1. California Housing Finance Agency. (2023). Accessory Dwelling Unit (ADU) Grant Program Termsheet. Retrieved from https://www.calhfa.ca.gov/homeownership/programs/termsheet-adu.pdf
2. California Department of Housing and Community Development. (2024). Accessory Dwelling Units (ADU) and Junior Accessory Dwelling Units (JADUs). Retrieved from https://www.hcd.ca.gov
3. California Department of Housing and Community Development. (2025). 2025 ADU Handbook Updates Webinar. Retrieved from https://hcd-ca-gov.zoom.us

An accessory dwelling unit is an independent living space located on the same property as a main residence, often in the backyard. This is considered the solution in many areas to the problem of scarce housing options.

Some Property owners rent their ADU out to gain extra income. Other property owners may have friends, relatives, or even aging parents move into the unit. 

If you are going to construct an ADU on your property, then you are going to want to be sure but it was well designed. Here you will find what you need to know in order to ensure that your unit looks its best while also accommodating all needs for you and its occupant.

Smart Layouts and Floor Plans for ADUs

Your first and arguably most crucial step for designing your ADU is to select the right floor plan. Floor plans need to meet the specific needs of its occupant. Do you intend to rent your property out, allow a relative to use it, or as an additional personal space?

If you are renting it out or allowing a relative to use it then you should place an emphasis on privacy for the sake of the occupant. For family use, accessibility and comfort are the name of the game.

If it is a personal space, then you need to outline the ways in which you intend to utilize that space. You need to also take into consideration whether or not the property needs to be wheelchair accessible, solar-powered, or any other specialty needs.

Innovative Interior Design Choices

Designing an ADU’s interior requires selecting color schemes and decor that is suited to the space and the objectives behind it. You want to select colors that are inviting, particularly in the living room. If you are looking to make the space look larger then you can utilize lighter colors.

However, you can use bolder colors, which can add depth and character. Utilizing built-in storage, multi-functional furniture, and well thought out layout planning can make a space easier to navigate and more comfortable. This is especially important in areas such as the kitchen or bathroom, where space needs the most optimization.

Sustainable Living with Eco-Friendly Materials

It is becoming increasingly popular to utilize sustainable materials in property construction. It not only has benefits for those who seek to support environmental stewardship, but also gives long-term benefits such as lower costs on energy as well as improved air quality indoors.

Some examples of sustainable materials are recycled steel, bamboo flooring, and low-VOC paint. These materials can help you reduce your ecological footprint and even contribute to a healthier living environment, which would be especially helpful if you are using the property to house aging parents or loved ones.

The Art of Multi-functional Furniture

ADUs are known for being smaller spaces, which means that the furniture used in one must be able to serve more than one purpose. A great example of multi-functional furniture is a sofa bed.

A drop-leaf table can serve as both a workspace as well as a dining table. Ottomans with storage and wall beds are great pieces that can save floor space. You can also utilize a wall bed in your bedroom. You will not have to sacrifice style or comfort with such pieces.

Creative Storage Solutions for Compact Living

Because ADU’s have less space than a full-featured house, smart storage solutions are a must-have. Building shelving and cabinetry directly into the walls of the unit is an easy way to maximize space.

Furniture with built-in storage space is also a major asset that can be utilized. Decorative storage baskets are also a unique way to save storage space while simplifying the aesthetics of ADUs. It is even possible to utilize personalization to a certain degree with custom-built storage.

Enhancing ADUs with Natural Light and Ventilation

If you want your ADU to be an inviting space, then it does not get much more inviting than utilizing natural light. Utilizing large windows, skylights, or glass doors can enhance the natural light in the unit’s space. This also improves the aesthetic appeal and can make the space feel much larger while adding an air of hospitality. 

Ask for ventilation, you can consider utilizing cross ventilation strategies such as positioning windows on opposite sides to allow free air flow. Installing high quality ventilation systems can also help to keep optimal air quality, which is critical in small living spaces.

Not only do these practices contribute to a healthy living environment, they can also reduce reliance on electricity and air conditioning, making the unit more energy efficient.

Complementing Your Main House with ADU Exterior Design

Because your unit will be so close to your main dwelling, you will want to create a cohesive look for the two dwellings. To do this, match architectural details such as color, and trim.

You can also utilize similar landscaping such as plants, pathways, fencing, and other similar features to the main dwelling. These efforts will ensure that the unit and your main dwelling are tied together aesthetically.

Tailoring Your ADU with Customization Options

If it is within your budget and you truly wish for your ADU to be unique, then you can utilize customized options. Features such as bespoke cabinetry, furniture, shelving, or even flooring can help make the space of the unit totally unique.

This can help to enhance the market value of the unit, ensuring that it is not only a nice place to live but attractive to potential buyers or renters. It is best to try and incorporate such options at the conceptual level of the house plan.

Incorporating Smart Home Technology

If you want to greatly enhance the efficiency, convenience, and functionality of your unit then smart home technology is something you should look into.

Lighting controls, smart thermostats, and security cameras can be controlled via applications that are available on your smartphone or tablet. These features can offer you additional comfort and much needed piece of mind.

Ensuring Privacy and Soundproofing

If you intend to rent out your ADU then maintaining privacy is critical in order to ensure respectful interaction with the unit’s occupant. You should consider design features such as strategically placed windows that are out of your direct sight lines when you are in the main dwelling or, you could opt for constructing a fence.

It is also a good idea to invest in soundproofing solutions such as double pain windows, solid doors, and thick wall insulation that can reduce the transfer of noise. These measures ensure that the unit is a peaceful and private home. 

Conclusion

Accessory dwelling units have immense potential as living spaces. They provide flexible housing solutions to renters on a budget, homeowners, and families.

If you want to maximize the function and comfort then thoughtful design is where that begins. As you plan your project consider each design choice carefully and how it can best be used to provide comfort, calm, and safety.

Sources

1. Los Angeles County Planning. (n.d.). Floor plans and accessibility: Pre-approved ADU plans. Retrieved from https://planning.lacounty.gov/
2. City of Corona. (n.d.). Interior design tips for ADUs. Retrieved from https://www.coronaca.gov/
3. AARP. (n.d.). The ABCs of ADUs: Sustainability and materials. Retrieved from https://www.aarp.org/livable-communities/housing/info-2019/accessory-dwelling-units-adus.html
4. AARP. (n.d.). The ABCs of ADUs: Natural light and smart design. Retrieved from https://www.aarp.org/livable-communities/housing/info-2019/accessory-dwelling-units-adus.html
5. Los Angeles County Planning. (n.d.). Exterior design compatibility for ADUs. Retrieved from https://planning.lacounty.gov/

An accessory dwelling unit is a secondary housing structure, typically 1200 square feet, that is located on a single residential lot and shares that lot with a main dwelling. These units typically serve as additional living spaces for family, tenants, or for personal use. 

A popular place to put in an ADU is the backyard. Backyard units can vary from being converted garages all the way to custom built tiny homes. They are popular because they offer versatile room solutions and because they can add value to your property. Here is what you need to know about having an accessory dwelling unit in your backyard. 

Zoning and Legal Requirements

Before you can begin to plan building a backyard unit, you must first understand your local zoning laws. These laws can dictate the size, location, and in some cases even the appearance of the unit to ensure that they meet the community standards.

In order to begin construction you must obtain a permit, undergo inspections, and adhere to building safety codes. It is best to engage with your local planning offices early in the process to ensure that the process goes smoothly and that the dwelling is functional, legal, and safe. 

Benefits of Building a Backyard ADU

Having a backyard ADU comes with numerous benefits for homeowners and their families. First of all, it is an additional living space that grown children or aging parents can take advantage of, ensuring an enhanced family dynamic thanks to close proximity while maintaining privacy.

If the owner of the property so desires, they can even rent out the dwelling for additional income. For this reason, such units are considered attractive investments, particularly if the backyard is a largely unused space. 

Design and Layout Concepts

Building an ADU in your backyard means that you will be confined to a set amount of space. This means that you want to utilize a layout that emphasizes vertical space utilization.

This can mean using a loft for a sleeping area, high shelf storage, and other means of maximizing floor space. You can also utilize fold out furniture, or built in units in order to enhance the functionality of The limited space.

If you are using a custom layout plan then you should focus on creating multifunctional areas that can serve different purposes. Utilizing large windows can also help to create the illusion of a larger space.

Tiny House ADUs

It needs to be said that an ADU is not exactly a tiny house, as they are normally larger. However, tiny houses and the way in which they are designed can offer insights for your backyard ADU.

Adapting concerts such as convertible furniture, clever room configuration, and compact appliances will enable you to use every bit of space in your unit. Utilizing these strategies will make the unit not only practical but comfortable.

Budgeting and Financing Options

Creating a budget for your backyard unit build requires a detailed understanding of the potential costs. This means creating a comprehensive budget that includes materials, permits, labor, and other unexpected expenses that may arise. As for financing options, there are different options that are available to homeowners.

A homeowner May rely on their personal savings, home equity loans, or utilize special ADU financing programs offered by some banks and credit unions. There are also certain states, such as California, that may offer grants or low interest loans to Property owners looking to build units on their property as a means of reducing problems caused by competitive housing markets. 

Prefabricated vs. Custom-Built ADUs

When you are ready to build your unit, there are two paths you can follow. You could choose to go with a completely custom-built unit which you have complete control over. However, this route is more expensive and a significant amount of time will be taken to construct the unit in your backyard. 

You can also opt for a prefabricated unit. This option is less expensive, more convenient, and will be built off site. This means that the only time construction will take place on your property will be for the final assembly of the unit. However, prefabricated units typically are not known for their customization options.

Sustainable and Eco-Friendly Features

If the environment is something you care about, then you can use the construction of your unit as an opportunity to utilize sustainable materials and eco-friendly features.

For example, you can install solar panels for the unit’s electricity which will also save you money in the long run and can earn you a tax credit. Some other things you can implement are energy efficient appliances and utilize sustainable materials such as bamboo flooring, recycled insulation, or wool insulation.

Interior Decoration Tips for Small Spaces

In order to decorate the interior of your unit you will need to make smart decisions that will maximize both space and functionality. Using multifunctional furniture, such as Ottomans with storage, extendable dining tables, or sofa beds will allow you to make the most of your limited space.

Utilizing light colors on walls and ceilings can also create a sense of openness. You can even use a common optical illusion by using strategic placement of mirrors to reflect the light. Also want to use built-in shelving and hidden storage solutions in order to keep your unit clutter free, organized, and open.

Privacy Considerations

Some may consider the possibility that an ADU located in the backyard would mean a decrease in privacy. However, there are ways that you can maintain privacy between yourself and the occupant of your ADU. First of all, you can invest in soundproofing the walls of the unit.

You can also design the windows of the unit on an offset, so that you can never look into the unit’s windows by looking out the windows of your main dwelling. Fencing options can also be utilized.

Technology Integration in ADUs

Smart home features are becoming increasingly popular in modern homes, and the trend extends to ADUs.

In fact, smaller housing units like ADUs in particular benefit from smart home technology such as smart thermostats, smart locks, RGB lights, and entertainment devices that can be controlled with applications for your cellphone or tablet. Integrating this technology at the conceptual level is a must.

Conclusion

An ADU in your backyard can be an incredible investment opportunity. A backyard unit can not only increase the value of your property, it can be a means of additional income should you choose to rent it out.

Making sure that you maximize the space you have and using up to date technology and materials will ensure that your backyard ADU is the best it can be.

Sources

1. Los Angeles County Planning. (n.d.). Floor plans and accessibility: Pre-approved ADU plans. Retrieved from https://planning.lacounty.gov/
2. City of Corona. (n.d.). Interior design tips for ADUs. Retrieved from https://www.coronaca.gov/
3. AARP. (n.d.). The ABCs of ADUs: Sustainability and materials. Retrieved from https://www.aarp.org/livable-communities/housing/info-2019/accessory-dwelling-units-adus.html
4. AARP. (n.d.). The ABCs of ADUs: Natural light and smart design. Retrieved from https://www.aarp.org/livable-communities/housing/info-2019/accessory-dwelling-units-adus.html
5. Los Angeles County Planning. (n.d.). Exterior design compatibility for ADUs. Retrieved from https://planning.lacounty.gov/

Whether it’s a granny flat, in-law suite, or cottage, all are common names for ADUs, all with the advantage of extra living space that’s sure to be the envy of every neighbor. A desirable addition with limitless uses, ADUs have become more popular in recent years. Still, for some people building an ADU can seem out of reach financially.

This is where the CalHFA grant comes in! A grant program creating housing opportunities for families all across the state, it provides funding to mitigate costs, making this project a reality to more and more homeowners. If you’re a California resident looking into building an ADU, stick around and find out how to make the CalHFA California ADU grant program work for you!

What is an ADU?

An ADU, or accessory dwelling unit, is a second housing structure that’s built on the same lot as a primary living unit. Generally, they act as a fully functional living space to include a bathroom, kitchen, rooms and the like. ADUs come in many shapes and sizes to fit the lifestyle and needs of all homeowners; There’s something to fit every existing structure!

For example, an ADU can be attached to a ground level structure like most envision when they think of a home addition. They can also be attached above a garage or upper floor. Converting a garage or creating a basement are also ADU options. Finally, you can have a completely detached ADU that offers an entirely separate structure from the original. 

What is CalHFA?

CalHFA, or the California Housing Finance Agency, offers financing to California residents who fall into a lower income category. They also offer programs to the same demographic to aid in renting homes. CalHFA can also help first time home buyers navigate and secure loans and down payments. 

Among their portfolio are certain grant programs, the $40,000 ADU grant program being one of them. 

What is the $40K CalHFA’s ADU grant and who qualifies?

The CalHFA ADU grant is best described by CalHFA itself stating, “The ADU Grant provides up to $40,000 towards pre-development and non-recurring closing costs associated with the construction of the ADU. Predevelopment costs include site prep, architectural designs, permits, soil tests, impact fees, property survey, and energy reports.”

This grant program prides itself on $100 million in grants with a $40,000 maximum per family creating the potential for 2,500 ADUs to be financed. While the grant money is usually allocated by the end of the year, CalHFA continues to provide important information about the program making it possible for financiers to prepare grants for the following fiscal year. 

As far as who qualifies, the broad answer is California residents who are classified as low to moderate income households; There are income limits for this grant. Those figures in specific are determined county by county though. For examples, see the low income limits for popular counties below:
For specific low income limits and access to the county search tool, check out the CalHFA’s eligible limits website.

How does the CalHFA’s ADU grant program work and how do I apply?

In short, there’s 5 steps to the CalFHA ADU grant program process. The entire process has been streamlined making for a seamless process from start to finish. 

1. Application: Homeowners will want to start by identifying approved lenders and then applying for a construction loan through one of those. They’ll then apply for the CalFHA ADU grant program via their application forms. 
2. Loan Approval: At this point, the homeowner will have to wait on approval of the construction loan from their lender of choice. After receiving approval the lender can then grant prequalification to the homeowner for the $40,000 ADU grant.  
3. Pre-Development: Any pre-development work needed on the project can start at this point, all paid through the construction loan acquired by the selected lender. The lender will now forward any invoices accrued from pre-development to CalHFA along with the original grant application. 
4. Grant Disbursement: When and if CalHFA approves the homeowners grant, the money will then be dispersed to the construction loan account. The amount dispersed from the CalHFA California ADU grant program will lower the total principal owed. 
5. Construction: Finally, it’s time to start the main construction on the ADU funded by the construction loan; The total cost of which was lowered by the ADU grant. 

As far as how it works with regard to the money disbursement, you won’t just receive the funds outright. If you’re approved for the CalFHA ADU grant program, they’ll combine the money with the loan you took out to cover the remainder of the construction costs. For example, if the total cost of your project is $150,000, your loan will pay $110,000 of the project cost with the CalHFA ADU grant taking care of the remaining $40,000.

CalHFA California ADU Grant Program Pros

There’s plenty of advantages to the CalHFA California ADU grant program. Take a look at some of them below when making the decision to apply. 

• No Repayment: Let’s be honest, the fact that the CalHFA ADU grant program requires no repayment is the best advantage of all. Pre-development costs can come at a hefty price depending on the type of project. The fact that you can put $40,000 of free cash toward this bottom line only gives you more to spend elsewhere. 
• Increase in Property Value: This grant helps to propel your property into a higher value bracket. More space isn’t all the ADU adds; It offers a unique flex space not found in your average home. Taking advantage of the grant to complete your project means more resale value on the other end. It’s truly a win-win!
• Reasonable Qualifications: The basic qualifications for this grant are very fair. For instance, you need to be a full time employee and at least 18 years old. You need to be a U.S. citizen and resident in the state of California for at least 3 months prior to submitting an application. 
• Borrowing Power: You can go into the grant process knowing that you’re going to be on the winning side of borrowing power. Secondary loans typically grant higher borrowing power so long as your credit score and finances are in order. That power combined with the $40,000 ADU grant means more than enough for project completion. 

CalHFA California ADU Grant Program Cons

Before starting the application process for the CalHFA California ADU grant program, it’s important to consider these drawbacks. 

• Grant Cap: This particular grant has a cap of $40,000 per household. While that’s no small number, it might not cover the majority of a larger project. Depending on the homeowners finances, it may not be an affordable project even with the granny money in hand. 
• Income Limit: Depending on your financial situation and the county you reside, the CalHFA grant might not be an option for your ADU project. Even the slightest overage on dollar amount can disqualify you from the grant process. 
• Specified Use: The CalHFA grant can only be used for pre-development purposes such as surveys, permits, site prep and similar construction preparation or on non-recurring closing costs. It will not cover anything outside of these parameters. 
• Timeline: Since the ADU grants coincide with a construction loan and these loans have to be repaid short term, the repay timeline can be stressful. Likewise, construction on these loans have to be finished on a short timeline.

ADU Grant vs ADU Loan

When it comes to the financial aspect of funding your ADU, many people get lost in the weeds with the terminology. Simply put, an ADU grant is money toward your project that does not need to be paid back. An ADU loan on the other hand, needs to be paid back to the lender within the specified timeframe agreed upon in your loan process. 

This seems easy enough but the CalHFA ADU grant leaves some scratching their heads when it states you need a loan too. The reason for the ADU loan is to cover actual construction costs for your project. Remember, the CalHFA grant only applies to pre-development costs incurred by your build. You’ll need a loan to cover the rest. 

While the CalHFA grant is great, it’s best to get pre-approved from a lender for the estimated construction cost before you do anything else. The amount they are willing to loan hinges on your income, credit, and many other factors. See what you can afford by the lender’s standards prior to moving forward. 

What are my loan options?

There’s several types of loans you can apply for to build your ADU. Here’s a quick rundown of the top choices:

• Construction Loan: The most common loan surrounding this topic is a construction loan. These loans usually come with a fixed interest rate, total customization in the building process, a lower monthly payment and other notable benefits. Unfortunately they do require a larger down payment and you will have to refinance once construction is complete. 
• HELOCs: A home equity line of credit is another frequently used loan for ADUs and in short, means you’re using your current home’s equity as collateral for the loan. HELOCs allow you to use what you need rather than being loaned a lump sum and they often come with a low APR given that you qualify. You should consider the risk you take in using your home as collateral though, especially when it reduces the equity you’ve built in your home. 
• Refinancing: Also making use of the home equity you already have, refinancing your current mortgage could help in paying for your ADU. Unlike HELOCs, you’ll acquire a lower rate and have the opportunity for a fixed rate mortgage if you’re coming from an adjusted rate loan. It’s important to remember, monthly payments could be larger depending on what you select. The upfront cost might be too much to handle for some, even though the long term savings are worth considering. 
• Renovation Loan: The option for renovation loans is great for those with a smaller down payment of around 3.5% and a lower credit score (even as low as 600). Oftentimes you’re able to borrow more than other loan programs depending on what the home will appraise for upon completion. These loans can be a pain though, requiring detailed scheduling from the contractor that goes beyond the normal scope of things. 

Keep in mind, this is just a shortlist of the loan options you have for your ADU financing. While less conventional, you could always take on a personal loan or even use credit cards if you have the available limits for such a project. 

Who will finance an ADU loan for my CalHFA grant?

Once you decide on which loan type you want to take out, it’s time to find a lender. Not all lenders offer ADU loan programs, especially ones familiar with the CalFHA grant. Even so, there’s enough to give you the choices you need. For an exhaustive list of these lenders by county, you can use CalHFA’s approved lender search tool. Here’s some of the approved lender to get you started:

• Envoy Mortgage
• Supreme Lending
• Platinum Home Mortgage
• New American Funding
• Loandepot.com

Always check with your current lender to determine if they offer ADU loans. While several of the lenders mentioned above are larger companies, it’s worth looking into local lenders and any incentives they may offer within. 

Steps in Building Your ADU Using CalHFA’s Grant

Grant process aside, the steps of actually building your ADU has its own procedures. While it’s an intricate project with no lack of moving parts, the steps below give you a birds eye view of the operation.

1. Acquire Contractor: One of the most important decisions you’ll make in the ADU build process is your choice in contractor. It’s important to pick someone who is known for meeting deadlines and who communicates well. Be sure they’re licensed and insured and someone who specializes in or is at least familiar with the ADU building process. Price is always on consideration as well. To ensure you’re not being taken advantage of, try getting multiple bids on the project for comparison purposes. 
2. Financial Review: Explained in detail in the “How Do I Apply” section above, you’ll find the steps you need to take in order to receive the CalHFA funding and how that fits into your loan. That aside, you’ll want to review your contractor’s bid, decide which financing option best fits your needs, and discuss adjusting your design if need be based on your project’s total cost. 
3. Feasibility Study: This study is a crucial part of the build process as it ensures your build is doable given the utilities from the main house, available lot space, local requirements, and the like. Ensuring that your space is viable for the project and meets building code will save you a huge headache in the end, avoiding possible pitfalls that are identified in the study itself. 
4. City Consult & Permitting: If all is well with the feasibility study, your contractor can now submit a complete set of drawings to the city. Alongside these drawings, they’ll begin working on the permitting needed for everything. Pulling these permits allows the work to be done legally and safely for all involved. 
5. Finalize Aesthetics: Probably the most fun step in the process is finalizing the materials used in your ADU build. Most people already have an idea of how they’d like their ADU to look both inside and out. If not, their contractor can supply them with 3D mock ups and material options from siding to flooring. 
6. Construction Begins: Finally, with all the nitty gritty details pegged down, your build out can officially begin! Completion times vary depending upon how big or small your project is and what customizations are being added. You can usually expect a build from beginning to end to take anywhere from 7 to 16 months. 

Conclusion

An accessory dwelling unit can serve many purposes that are beneficial for expanding families, guests and the like. Even so, it’s no secret that finances can pose an obstacle in making this dream a reality. That’s why the CalHFA California ADU grant program is worth investigating. This grant program takes the sting off the bottom line, offering a more affordable project with the extra space many families want or even need.  

Ready to get started on your accessory dwelling unit? We’re ready to assist! Get a FREE ADU consultation in the Los Angeles area! Call Structura Remodeling at 1-800-922-4613 or schedule a free consultation here:

Call Today 1800-922-4613 for a free in-home estimate.

Structura Remodel and Design Company…Dream. Design. Build.

*Serving Los Angeles county and surrounding areas*

FAQ

What is a JADU?

Similar to an ADU, a JADU or junior accessory dwelling unit, is also a housing structure built with the intent for living with one caveat: it’s no bigger than 500 square feet. As a rule of thumb, JADUs are attached to the home and because of the smaller space they don’t have the full amenities of an ADU.

For instance, you’ll find JADUs likely share a bathroom with the main living quarters, not always a separate bathroom as with ADUs. Similarly, JADUs will have some type of space for prepping food but not a full kitchen for cooking. 

What is a UDU?

A UDU, or unpermitted dwelling unit, is an ADU that has not been built under proper permitting. This is often the result of a DIY with the best intentions. While it can be tempting to construct an ADU on your own, the risk is not worth the reward in this case. Using a trusted contractor like Structura Remodeling ensures everything’s done legally. 

If not, you run the risk of having to revert back to legalizing your ADU which is not only a hassle, but not always doable. You’ll need to study county codes, bring the unit to standard, submit plans, undergo inspections and so forth. If you’re lucky, you can make things right, but it’s not a chance you’ll want to take.  

Can the CalHFA California ADU grant program work alongside SB9 California?

The SB9 or Senate Bill 9 allows for California homeowners to build new housing structures on their single family lot by splitting the lot in half. This bill helps provide homeownership opportunities and the possibility of multigenerational living, much like ADUs tend to do. 

Regardless, homes built using SB9 are considered to be entirely different projects though their structures are often similar. Generally, you’ll find SB9 builts to be larger and thus are governed by separate rules. That said, the CalHFA California ADU grant program cannot be used alongside SB9. 

What if I applied for the grant after paying out of pocket for upfront costs?

Unfortunately, any upfront costs you may have paid in the pre-development phase cannot be repaid to you directly. That doesn’t mean you’re completely out of luck though! If you have proper documentation in the form of invoices and receipts you’ll likely be able to apply the unused grant balance to your loan. 

This balance can go toward payment on the principal of your loan, so in an indirect way you’re still seeing the money back or at least working in your favor. 

Are ADUs worth the investment?

An ADU is no small project and with it comes a price tag that may scare off some. For those who can see the long term value though, ADUs are well worth the investment. Surveys on the return on investment for these structures report an average of a 35% bump in sale value. 

ROI aside, they’re worth the investment when it comes to extra space alone. They’re perfect for expanding families and a place for your out of town guests. Not to mention the possibility of using ADUs for an AirBnB site. They have endless potential!