The Impact of an ADU on Resale Appeal in Los Angeles

The Impact of an ADU on Resale Appeal in Los AngelesAn Accessory Dwelling Unit (ADU) can be a great way to make your current home fit your needs, but before you choose to build one on your property you need to know how it will impact your resale value and appeal. Adding an ADU to your home is going to change your property significantly, so here's what you need to know.

What is an ADU?

ADU stands for Accessory Dwelling Unit. It is a secondary housing unit located on the same lot as a primary residence. ADUs are smaller than the main house and can be used for various purposes, such as housing family members, providing rental income, or serving as a guest house. There are a wide variety of styles, price points, and purposes, so it can be a challenge to provide a narrow definition that encompasses all of your options.

What are the benefits of an ADU on my property?

There are plenty of reasons a homeowner might consider adding an ADU to the property. These are some of the primary benefits: 

  • Rental Income: Renting out an ADU can provide homeowners with a steady stream of additional income.
  • Housing Flexibility: ADUs offer versatile living arrangements for extended family, aging parents, or young adults needing independent living space.
  • Increased Property Value: Properly designed and built ADUs can enhance the resale value of a property by adding livable space.
  • Affordable Housing: ADUs contribute to the availability of more affordable housing options within established neighborhoods.
  • Efficient Use of Land: They maximize the use of existing residential lots, especially in urban areas where land is scarce.

What are the risks of building an ADU?

The biggest mistake homeowners make when building an ADU is cutting corners with zoning, permits, and construction. These shortcuts will become particularly problematic when you decide to sell. 

Before you start any construction, you must familiarize yourself with Los Angeles’ zoning laws and permit requirements. ADUs are subject to specific regulations that vary depending on your neighborhood and property size. ADUs in Los Angeles have size limitations based on the lot size and the existing structures. Generally, an ADU can be up to 1,200 square feet, but this can vary.

You also need to evaluate the potential ROI. An ADU can generate rental income, which might cover the construction costs over time. Additionally, it can significantly increase your property’s resale value, particularly in a high-demand market like Los Angeles. This should all be taken into account as you decide how much to spend on construction.

If the ADU is constructed well, within a reasonable budget, and is permitted, the risks of adding one to your property are quite small because they have such a great ROI. 

How will an ADU impact my resale value in LA?

An ADU is going to put your property in a highly desirable category with limited inventory. This translates into a favorable situation for you as a seller because we usually see more buyers looking for this type of property than we do properties with an ADU on the market at any given time.

Bill Gassett, owner of Maximum Real Estate Exposure provides excellent guidance. Bill has been selling real estate for three decades so he has tons of experience in the industry.

"One of the rising trends over the last several years has been the rise in popularity of the ADU. More and more families want the ability to live together. The ADU allows them the perfect opportunity to do so. It affords being close together while family members still having their privacy. Since these housing units have become in such demand, properties that have one command premium pricing.

It draws in more buyers, which makes selling a home far easier. They are also not allowed in some areas which makes them harder to find. It all adds up to a win-win for those who are able to add one to their property."

Homes with ADUs are appealing to a broader range of buyers, including multi-generational families, investors, and those seeking rental income to offset mortgage costs. The demand for properties with ADUs is growing. As more people seek flexible living arrangements, having an ADU can make your property stand out.

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