Why build an ADU or a Granny Flat in Los Angeles?

As of January 2017, a new state law took effect that encourages homeowners in the state of California to build Accessory Dwelling Units, also commonly referred as “granny flats”, “in-law units” or “secondary units”. The law could prove to be a major step towards solving the housing crisis of California.

The city of Los Angeles is one of the worst hit by this crisis. A recent report showed that the number of homeless people in the city have increased from 33,423 in 2010 to 55,188 in 2017, even in spite of a drop in homelessness nationally.

The problem is in part due to the crazy rent in LA. The average rent for an apartment in Los Angeles is $2,220 which is a 5% increase from last year’s $2,120.

With nearly 60% of the citizens of Los Angeles use over 30% of their income for housing costs, the problem affects the majority of people living in the city. The new laws supporting ADU development on single family properties presents the homeowners with an opportunity to maximize the income potential of their properties and contribute to the housing supply at the same time.

Building an ADU with 1-2 bedrooms in your backyard can increase a property’s value by 10-30% in Los Angeles city limits. Also, homeowners can earn about $1,950 a month for a 1 bedroom ADU and about $2,750 a month for a 2 bedroom ADU in passive rental income.

In conclusion, building an ADU can make extra money to homeowners, increase the housing capacity of the city, decrease the homelessness, reduce the housing price and therefore can be a huge step in solving the housing crisis of Los Angeles.

Check out how much you can earn on your property in Los Angeles here.

Construction of an ADU

Since it is clear that ADUs can be a big win/win situation for many - homeowners, renters and the city - I may be of further interest to learn a bit about cost involved in building an Accessory Dwelling Unit.

Construction of ADUs typically cost less than any other housing because they do not involve paying for land or buying major new infrastructure.

ADUs can take one of the three forms:

Detached: A new construction unit that is is separate from the primary home.

Attached: A new construction unit that is attached to the primary home.

Conversion: Existing space within a primary residence, garage or secondary structure that is converted into an independent living unit.

The cost per-square-foot of an ADU is likely to be the same as any other new residential construction which can be about $150/sqft to $500/sqft for builder basic finishes: two-color paint, carpeting, stainless steel, sheet mirrors, and granite countertops. Of course, there are a lot of variations to this rough estimate depending upon site condition and a lot of other factors.

Does my property qualify to build an ADU?

You can most likely add some form of ADU to your property if you meet these requirements:

A single family home exists on the property.

The home has one of the following:

A large enough space in the rear yard.

A garage or accessory structure in your backyard.

A room that can be converted into a unit with its own entrance.

Your home is located within 1/2 Mile from public transit or has room and access for an additional parking space

Building an ADU can be a daunting task if you are not aware of your city’s zoning guidelines. Check the zoning guidelines for building an ADU in LA here.

How many ADUs are there in Los Angeles as of 2017?

Since 2003, a total of 644 projects have pulled a permit to build an ADU; however, only 404 of those have received a certificate of occupancy. The 644 permitted ADU’s represent 1/8th of 1% of the City’s 485,000 single family zoned parcels. Those numbers reflect the overall total as of March 14, 2016.

It is estimated that there are thousands of structures that have been converted illegally by converting a garage or recreation room into a dwelling unit without proper permits. Those units are not made legal by the new ordinance and are subject to citation. Some of these existing units may be eligible to pursue permits if they otherwise meet the requirements of the new ordinance and the City’s building codes.

Most of the approved units have been located in the San Fernando Valley because the lots are typically larger and the driveways and lots are configured such that an ADU can be accommodated. Some units have also been legally built in South LA, Hollywood and West LA.

*** Update: Over the last nearly 2 years since this post was written, the ADU production in The City of Los Angeles has skyrocketed to over 2,000 units in 2017 and more than 4,100 units permitted in 2018. This means that in the last year, ADUs accounted for about 20% of total housing units produced in the city. It seems that the state law and the pent-up demand for housing solutions has really kicked off with a bang. Stay tuned!