Welcome to our latest blog post, where we dive into the world of Accessory Dwelling Units (ADUs) in Claremont! With the increasing demand for affordable housing and the need for flexible living arrangements, ADUs have emerged as a viable solution. In this comprehensive guide, we will explore the ins and outs of investing, financing, and building ADUs in our beautiful city. Packed with event photos, videos, and a full transcript, this post is designed to educate and inspire homeowners to consider the potential benefits of incorporating ADUs into their properties. So, let’s get started and unlock the possibilities that ADUs have to offer in Claremont!
- ADU FAQ’s by Gold Coast Solutions
- Full ADU Summit Presentation (1 hour video)
- ADU Summit Slide Deck
- Full ADU Summit Transcript
- Event Photos
ADU FAQ’s by Gold Coast Solutions
Full ADU Summit Presentation (1 hour video)
ADU Summit Slide Deck
Full ADU Summit Transcript
JOEY RASICH: A LITTLE BIT ABOUT OUR COMPANY,
a little bit about why we are putting this event on today. So, we are a general contractor. We’re a team of skilled and dedicated professionals and we’re very passionate about helping our homeowners. And really what we are trying to do is bring our homeowners vision to life.
We specialize in ADU’s custom homes, room additions, kitchens, bathrooms. We do a lot. We take a lot of pride in our work, and we’re committed to creating beautiful, high quality and functional spaces for our clients.
Our philosophy is very simple. We believe in building relationships just as strong as the structures that we build. We value open communication, transparency, and a genuine care for our clients.
We understand that building and remodeling a home is a significant investment, and we’re dedicated to making the process as smooth and enjoyable as possible.
Today we have an awesome lineup of speakers who will share their expertise on various aspects of ADU’s. We’re honored to have them with us and may urge you to ask questions and engage in conversation.
Together, we can learn, grow, create a more vibrant and sustainable community.
Once again, thank you for being here this morning and I hope you find this summit informative and inspiring.
If you have any questions or need assistance, please do not hesitate to reach out to me or any member of the Coast Solutions team. Who you can find wearing our black polo shirts.
Let’s make the most of the ADU Summit and I hope everybody has an amazing day.
I’m going to take a few minutes to introduce you to my amazing team behind the scenes at Gold Coast Solutions.
Each member brings unique skills and experience contributing to our success as a company, and I’m going to ask them all to stand up here.
First, we have Jeff Roe. He’s our project manager. Jeff has years of expertise in this field. He is a former Army veteran. He has excellent communication skills and ability to keep projects on track, working with our clients is invaluable to our success.
Tim is our field supervisor. His attention to detail, mastery of his craft ensure that every project is finished perfectly. His dedication to quality is evident in everything he does.
Next, we have Lisa, our office manager. She brings general contracting experience and a keen eye for design. She excels at helping customers select the perfect materials for their projects, ensuring that their vision comes to life.
Jerry, our concrete and foundation specialist, has a wealth of knowledge in every aspect of construction, particularly concrete work. His strong work at work ethic and commitment to excellence is awesome and it’s inspiring.
Next, we have Joey Scudder, also known as Joey Plumber. He is our skilled plumber and is known for his great attitude, promptness and exceptional work. He’s extremely reliable and is a highly valued member of our team, always delivering on every project.
Tom Our tile installer with 40 years’ experience brings a wealth of knowledge and a pleasant demeanor to every job. His expertise ensures that our client’s tile work is always impeccable.
Manny, another talented tile installer is meticulous, and detail oriented in all of his work. His enthusiasm and love for our company makes him an awesome pleasure to have on our team.
Elias is one of our multi tradesmen, he skilled in various fields, including electrical, carpentry, painting.His ability to find solutionsand follow directions is invaluable to our company’s success.
Tony, a carpenter, and former general contractor, has a fantastic attitude, is always a team player.His positive attitudeand energy are contagious, and his skill set is a valuable asset.
Brian, our carpenter electrician with 25 years’ experience, is a marine veteran, who brings a strong work ethic and great attitude to our team.
Chris, our flooring installer, is an expert in his field and is always willing to learn new skills. His enthusiasm is indispensable, and we couldn’t be happier to have him here.
Tom Junior, another tile setter, is committed to his increasing skills in the industry, as friendly enthusiastic personality.
makes him a joy to work with.
And finally, we have Andrew, our Tile Apprentice. Andrew is kind, helpful and eager to learn. He follows directions well and is always willing to try new things.
Every member of our team plays a critical role in the success of Gold Coast Solutions and we’re grateful for their hard work and dedication.
Now let’s get started with our event and learn more about the exciting world of ADU‚’s.
We have a very special treat for you all, we have prepared a short two-minute video that answers some frequently.
asked questions about ADU‚’s. It’s also going to showcase some of our recent ADU projects and is going to highlight the quality of our teams’ work and the satisfaction of our clients.
Before we play the video, I do want to give a special shout out to JMI Creative. They did an awesome, incredible job assisting us to do this video and helping make this event possible. We could not have done it without them.
So, without further ado, please sit back and enjoy this informative video.
So, you’re considering building an ADU? At Gold Coast Solutions, we’re here to answer your frequently asked questions and showcase some of our recent ADU projects.
You might be wondering what is an ADU? An ADU is a completely separate secondary dwelling unitwith complete independent living facilities for one or more people.At Gold Coast Solutions, we specialize in various types of ADU’s, including Attic ADU conversions, ADU additions above existing garages,detached ADU‚’s, attached ADU‚’sand garage conversions to ADU‚’s.
You’re probably wondering what the difference between an ADU, and an addition is. An ADU is a completely independent living space with its own kitchen,bathroom and sleeping area.On the other hand, an addition is simply an additional roomattached to the existing home that can include a bedroom, a bathroom,a living room, a den, and other specified areas of the house.
Now that you know what an ADU is, you’re probably wondering about ADU laws. The state of California has passed new laws lifting restrictionsand making it so much easier and so much more affordable to build ADU‚’s.With the new laws in place, California ADU construction is at an all-time high.Some key points about the new laws include faster ADU plan review times, more flexible way to use size and setback requirements and zeroimpact fees for ADU‚’s under 750 square feet.Also, you can legally create a triplex on every single lot in the state, under AB 68, which allows landlords and homeowners to add two more unitsand ADU and a junior accessory dwelling unit on any residential lot.
Here at Gold Coast Solutions, we are so committed to delivering quality, craftsmanship, attention to detail and trusted relationships that create beautiful, comfortable spaces and improve the lives of our customers and our employees. Don’t hesitate to reach out to us today to learn more about how we can help you build your dream, ADU. Thank you.
Just a sneak peek at the bit of information you’re going to be able to get back at today’s event.
And without further ado, I am very truly honored to introduce our esteemed guest. Speaker, Mayor Ed Reece.
Mayor Ed and is a public servant. Under his leadership,
the city has achieved remarkable progress in various sectors, including housing and urban development. Today, he will share his insights on the exciting
ADU grant program, which could be a game changer for many Claremont residents. Please join me in welcoming Mayor Ed Reece to the stage.
MAYOR ED REECE:
Thank you, Joey. Good morning. Good morning. You know, I am I want to thank Joey and Gold Coast for inviting me here today. And allowing me to share with you the independent information with you, with regards to what the city is doing around ADU programs and a new construction.
As you heard in the video, the state government follows all state guidelines for the review and approval of accessory dwelling units and junior accessory dwelling units.
Additionally, Claremont has crafted an ADU program that really kind of enhances our community to this end.
The city has guidelines on the design of the structures, and so simply on the design required to duplicate or replicate or be similar to the main home, currently has an architectural guideline which provide ADU‚’s.
An ADU’s unit style must be compatible with existing property either to the same style, same material, same colors, and quality must be use
when you’re developing a new ADU or Junior ADU.
However, if you are going to propose a higher quality that is also allowed.
What’s the process?
Well, there’s a number of things that have to take place when you develop a new ADU or junior ADU, and that includes construction plans, building permits and similar to the required plans, when you do submit plans for a new or the city will require a site plan showing all existing and proposed structures parking, if any, and or I should say if required and the location of any mature trees. This is the city, as we’ve heard before, of trees and PhD’s, and it’s important that mature Trees.
are taken into consideration.
A floor plan of the proposed ADU must be provided adding any existing structure as well must be noted. And especially it’s an ADU conversion. So, if you have a garage that you’re converting, or a portion of the garage right at the very end, this structure information is needed.
And another elevation plan with detailed exterior features such as signing materials, doors, windows, roofs, trims, gutters, recesses vents and other exterior finishes, but also be part of your plan.
So, before you start building and getting a building permit and other approval from the city, the city will need that detailed plan for your ADU project.
And also, it must be drawn to scale. It’s important to remember when you’re coming to the to the counter, you need to come with your plans and your information and go and have your drawings to scale.
What will happen is the city will determine if your project conforms to the local zoning requirements and make sure that it is appropriate for a material outcome and make sure it’s safe and up to code so that.
People ask what’s needed and what the cost is, in developing an ADU.
So, here’s where you can take some notes. If you’re thinking about an ADU here in Claremont, there’s a number of fees associated with ADU‚’s. Part of the building permit process. So, you have a plan check fee and that’ll be about 1% of the total valuation of your project.
You have a building fee, which is approximately 3%
of the total valuation of your project. You have school fees, if the project is over 500 square feet, and that’s paid directly to the school district. You have a hard hat fee, if your ADU is over 799 square feet. That’s about 1100 dollars. You have a planning department charges for a lot of reducing, that initial evaluation of $918. You have grading fees that can start at $277 and go up to $8,000, depending on what you’re creating. And then you have sewer impact fees and those are assessed proportionally based on the square footage of the ADU. So those are all important fees.
Remember, as you develop your budget and then looking at a number to review your paper, you know, the kind of a lot of fees. I’m very excited that I was able to champion a New ADU grant program, and part of the grant program was to help our homeowners here in Claremont offset some of these fees.
And so, the city allocated $400,000 for the American Recovery Fund and created this grant program. The program provides grants up to $20,000 for ADU construction The ADU’s using the grant money, however, must be required to rent at affordable rates for a minimum of three years.
The city has approved ten applications for a total of $200,000 and is in the process of qualifying an additional ten applications upon approval of the second ten applications, the voters will have been extended for this current funding cycle.
However, the City Council could re-evaluate allocated funds. So again, on this grant program you do need to apply. There is a cable online to our website and find more information about the grant program and how to apply to it.
If you do have interest in it, there’s also an opportunity there to submit your information so that you can be alerted when the next allocation of funds comes in before the program has been highly successful.
A lot of people have applied and are wanting to build ADU‚’s and this is exactly the reason why I want to provide a grant program for our community. It’s important that we take the opportunity to build affordable housing that build affordable housing, not always concentrated in one area, but spread it out throughout our community and I know we’ll be able to make the process those that we want to do really encourage and encourage homeowners to build their ADU‚’s, and build their Junior ADU‚’s. there’s also a lot of benefits in regards to home valuation, which I’m sure is a great that we’ll be talking about soon.
So, I also we’re talking a little bit about how we’re trying to make it easier for ADU‚’s to be built. Not only is it during the grant program, but here is also what we’re working on right now is an RFP to create a standard. The city has issued a request for business or an RFP for standard ADU designs that will make it available to property owners for free.
Once we complete that and what that does is it provides the opportunity for us for our community to literally take a design off the shelf, take a whole plan off the shelf.
They don’t have to pay for design things for it and say, that’s what I want to build in my property.
And so, the designs will range from 100 to 600 square feet. One of the designs will be fully accessible for wheelchair access and our piece of vision for that are due in early May. And the goal is to have a pre-approved plan and of course, again, to lower the cost of designing.
and building and ADU and streamlining the process for approvals.
And one question that city staff gets asked a lot about is parking. When I build an ADU, is there a requirement for additional parking? So, no, there’s not a requirement for additional parking. If you’re ADU is able to meet one of the following standards.
The ADU is located within one half mile walking distance of a public transit, and that is fairly so. It’s fairly easy to achieve most locations around and I have a bus stop that’s nearby and so that would be a qualifying mode of public transit.
The second option would be a medium located within an architecturally a historically significant district within the city.
Parking is going to be required at it was proposed or existing primary residence for this case is proposed to be part of the existing primary residence. Parking may not be required if there’s a car share vehicle located within one block of the venue, and we have seen that in some other cities parking may not be required.
And then when it comes to parking, provisions are required in an opportunity to activate. Parking may not be required.
So, I think that’s important to reach know if you’re resident in your timeline, you know that overnight parking program and your requirements on that and in this particular case overnight parking still apply
but you would not have to have dedicated parking for that ADU or Junior ADU, if you qualify on that one of those options. So that is part of existing. parking and driveway, etc. But you would not need to have additional parking.
So, wrap it up for you. I give you a lot of information like what was the criteria for me as much as I can on City Process and how that works.
So, a bit about the grant program, but if you are considering it as a building an ADU, or a Junior ADU, our city planners, the staff can sit with you and can go over that part of the process and help you walk you through part of the building permit application process.
But again, the first step in the process is the first figure out one. This is what I want to do too, is a lot of times easier to it is something you would do and you’re not going to use eventually use while are pretty well planned, it’s usually easier to.
Figure out what contractor to use and then work with that contractor, who then can also. Assist you in working with our city staff. If you wanted to do a design build of your own again, our city staff is there to assist you in helping you, maybe a counter appointment, and they can walk you through that process. What might be appropriate exercise? Right?
So, I give you a lot of information and I appreciate the opportunity to do that. And I know there’s a question-and-answer period later in the program, but I’m happy to answer your questions at that time. Thank you so much.
JOEY RASICH: Thank you. And that was awesome.
Very informative and a couple of things
that I can touch on is I’m so excited for. Those pre-determined and pre-approved ADU designs that come through the city of Claremont are going to save our homeowners a lot of money.
And also, I just want to reiterate that, here at Gold Coast Solutions, if that process seems a little overwhelming, we actually handle everything from conception to completion. If you’re working with us, you never really have to visit city hall, if that’s not your thing.
Something to keep in mind, now, it’s my pleasure to introduce our next speaker, Mr. Tim Harrison.
He’s an accomplished mortgage expert with a wealth of experience and knowledge in the industry. As the mortgage branch manager of the HLC Team at Cornerstone Home Lending, Tim has dedicated his more than 30-year career to helping clients understand and navigate the complexities of the home mortgage process. His exceptional service and expertise have earned him recognition as one of the top loan officers nationwide. Tim is not only a valued professional in his field, but is also an active member in our community, serving on various boards and organizations in Claremont.
Please join me in giving a warm welcome to Tim Harrison, the Straight Up Mortgage guy.
TIM HARRISON:
All right. Sorry, I cannot sit still, ADD with ADU, right? I am going to
introduce myself a little bit different, and that is one. I have a finance degree. I have done mortgages for about 30 plus years. But the thing that I bring to the table here versus just a mortgage person is that I’ve got quite a few rentals. Some of them where I’ve added ADU’s or done separation of the front house and stuff like that.
And so, by accident and by running into the brick wall and hurting myself, severely, I also became somewhat of a real estate expert because I always like to learn the hard way.
So, when it comes to the financing options and everybody’s situation is different, so we can pay cash, right? Because we all know interest rates are much higher than they were two or three years ago.
If you need an equity line is a really good way to do this. One of the things I can tell you is that if you’re looking to do anything, room additions, whatnot, don’t rush into talking to the mortgage person unless you just want a quick conversation.
Like how much is the payment going to be? Because the first thing you want to do is figure out what is my cost going to be? So, this is giving you some idea of whether you do a Junior ADU… a Junior ADU is usually that is within an existing property. that is only now in the front house. The ADU, where you’re adding a whole separate unit, is something totally different.
So, you need to know what those costs are because, until you know the cost, we can’t really give you a very upfront payment.
And you come to me and say, well, I want to know what is the cost? I have no idea how much the loan you’re going to need.
The other things are, you have to go to your contractors and the city, or however you are going to do it, and figure out what is that cost? And then we can give you an idea of the payment. But again, you also don’t want to start with a loan because this process, I don’t care how fast the city has sped it up, it takes time. You could be paying interest for 3 to 6 months before you start building. So, what’s the point. Right?
Rates are probably going to drop in the next 3 to 6 months.
So, wait until you make it closer to having a conversation with your mortgage person. You know, because again, I can’t sit there and tell you what the interest rate is going to be or any of that stuff, because in a room like this.
Everybody’s credit scores are different.
Everybody’s equity position is different.
How you’re going to finance it might be different if you have a very low interest rate on your first like many of us do after the pandemic and you need to finance the equity is probably going to be the best way to do that.
And the reason why the equity line works well, you can get the other one for pretty much free for most banks and credit unions. I don’t to do those. We just bought a bank so, not me, but my company. So eventually we might be able to.
But the reason that an equity line is good for this kind of product, is as rates come down, you might be able to refinance and combine. that equity lines. But while you’re building your loan, having to pay the interest that you draw.
Does that make sense?
I’m going to address a couple people in here that but think about those ADU‚’s and junior ADU‚’s is a very good way for seniors to be able to stay in homes and to have somebody around and all that kind of stuff that’s paying rent, which is kind of cool.
But when you’re doing that, you could also use a reverse mortgage.
So, let’s say you don’t want to add a mortgage, you just really want the income you get also use reverse mortgage.
So, equity lines redoing your loan.
If you don’t have a loan, then it makes more sense to just do it in first trustee because that’s going to be a lower interest rate than an equity line.
Construction loans. If you don’t have enough equity, that would be where you must look at what the future value of that property is going to be by the time you have the ADU. And what is that? And you could use a construction loan that you must be able to prove equity to be able to pull money out of the house again.
Cash is always best. Investment is always Best. But. Most of us don’t have that.
So, I’m going to go into oh, by the way, personal loans, because the return on investment, if you go rent out that piece of it, you might be okay If you go to somewhere and get a pretty good rate, but quite frankly, probably not the best option.
Okay.
Government grants and programs. The only one I know about is you must have the owner occupied and a problem. Ed, I want to call you guilty because I thought about getting ready this morning, and I’m like, I haven’t worn a tie in a long time as you can see from the original photo. But Ed’s going to be there, he’s going to be in a tie. So, this feeling of a noose around my neck,
Thank you very much.
Private lenders and investors again. So, the first thing you want to do first, trust deed if you don’t have a mortgage or your mortgage rate isn’t that great.
Second choice is going to be an equity line
third choice is going to be a construction loan.
- Fourth choice is going to be a personal loan.
Fifth choice is going to be private money, especially if it’s one of your parents that will live at your house, hey will probably lend it to you at a very cheap rate.
I want to tell you about things as a professional investor. If you start building this. Make sure your kids know that it’s an investment. You get to spend money and that they’re going to pay rent if they’re going to live their life. You got to be careful, right? You know, they start to come home. And if you’re a kid, make sure you really like your parents, because now you have a place they can live.
So as far as the investment part of this, so whether you are using it to stay in the home longer or as a return on investment, I think that’s a hard to calculate because we don’t know what your cost of interest is going to be.
We don’t know whether you’re going to pay cash. I can tell you of all the investing I’ve done, stocks, bonds, real estate, ADU‚’s, having additional units paying rent on a property, one evens out that income stream so that if you have a vacancy. You still have another unit payments that helps you even that out when is being renting it when both are being rented, that makes it much more profitable. The more units you have, on anything, whether you’re buying single unit or multiple units like a five, say seven, ten, it is a much more profitable product when you get to more units, period.
So, I know that we have some sort of stuff that the government gives us for free. It gives them free and its available anti-fraud stuff. So, one of the things I want to do with some serve the public message here is we have things like how to get off the do not call list, how to not get junk mail. Experian and all of them can sell your credit now, so you’re running your credit also you’re getting out of life the other people, because they’re selling your information. You can get off that list permanently five years just online by mailing something in so that they can sell you all that stuff. I’ve done all this, and it’s been very helpful because I don’t know about you, but I’m tired of getting in spam calls I had.
So, as far as the ADU goes, I just it is something that I think has a bit on the cover here. And I know the words are all right, so I’m going to address that. We have neighbors that can get a little bit picky about the stuff and concern about it. Any time said the things that has to be renovated. How do you manage your renters, how you have somebody live
in the back of your house? You have to remember we’re going to just be very respectful to your neighbors and stuff because this is why we get this bad publicity and people get some way out of that.
But this is a state mandate for a reason, because the cost of housing in California is so severe right now. The people that are might be our service providers and care providers cannot live within a lot of our cities or anywhere nearby. So, this is mandated by the state. This isn’t a city choice. This is saying we have to figure out ways to view lower cost housing. And one of the biggest things they can do without putting just a big like mega complex of low-cost housing is that they can have this considered low cost housing throughout the city
and provide a real need that’s there.
So, understand your city officials you have doesn’t really have a whole lot of choice in this. But just also get the stamp of the city to live in the city for a long time. You know, it’s great. Realize that housing impact your city reflects on how this all works out for everybody. So just be considerate if you are thinking about this.
So, I think there’s a question and answer session later. I don’t have a whole lot more than that because again, everybody’s situation is different, and it’s really sort of coming to me and sort of asking me for what other solutions are.
JOEY RASICH:
Thank you, Tim, that was an awesome, very informative and I appreciate you coming here today. One thing I do want to touch on that that potentially touched on here is, you know, a lot of our previous customers and a lot of our future customers are building ADU‚’s for aging parents. Right. And so sometimes you’re thinking about that.
You may not be thinking, okay, all this stuff about rentals and all this stuff on return on investments and all that, it’s not really important to me, but most of the time our customers have a long-term timeline that they’re thinking about, right when it comes to housing their aging parents, as well as wondering what to do later on. Right. So it’s just something to keep in mind. And very important Tim, I really appreciate it.
Next, I would like to excitedly introduce our next speaker, Mr. Joe Porrect. He is a true local expert with a deep understanding of the entire San Gabriel Valley. Joe’s background in international business
and marketing from Cal Poly Pomona has equipped him with a strong leadership and collaboration skills, which he puts to use in providing exceptional service to his real estate clients. Joe utilizes advanced negotiation tactics and technology to achieve a best result possible. His passion for photography, videography, and hands-on problem-solving skills makes him a very versatile professional in the real estate industry. Please, join me in welcoming Joe Porrect.
JOE PORRECA:
Thank you for that wonderful introduction. Joey.
I am so excited to be here. This is a wonderful event, and these are just growing in popularity and I don’t see that stopping anytime soon. So anytime you have events like this where information can be disseminated to the public. It’s a great thing.
A little bit about myself, Joey gave you a great introduction. My name is Joe and I’m local all the way through and I’m local all the way through.
I was born in Arcadia, and I lived in the San Gabriel Valley my entire life, and I lived in the Claremont community for the last ten years with my wife Michelle, and we love it here. Went through the Bonita Unified School District, Citrus College, Cal Poly, Pomona and as Joey mentioned, a licensed real estate agent for Wheeler Steffen Sotheby’s International Realty.
I’ve been a licensed agent for seven years. I’ve been in real estate about ten years. It’s a wonderful profession. I enjoyed helping people navigate buying and selling real estate. That’s a huge decision and I find that it’s a great way to be able to help people really accomplish a goal.
So today, we’re going to talk about a few things. A lot of the stuff I’m going to cover is going to talk about value and how you can add value.
Value is, you know, it’s an interesting word. There’s a lot of ways to interpret value. Of course, we are going to talk about increases to your home’s equity, but there’s other things that go into value as well, and we’ll touch on those currently right now with the current market trends and growing demand over the past five or seven years, the demand has grown greatly for ADU‚’s. And this is this is really no secret. I think this is a
pretty obvious statement.
There’s been a 25% increase in ADU‚’s, in just the last ten years, according to the National Association of Homebuilders. And there’s a few reasons for that. Some of these reasons we touched on by our earlier speakers. There’s been some legislation changes, as we’ve heard and mentioned up until about five years ago, building any detached unit was quite costly.
It’s a long process and you had to be really committed into building that unit and there’s also a housing shortage, which we all know unless we’ve been living under a rock, the market’s very competitive and it’s a simple supply and demand issue.
We have not been building homes for about the last ten years at the pace that we needed to. And now we’re in a bit of a situation, especially in our highly densely populated areas like Los Angeles County, Orange County, and so on.
One of the ways that we’re trying to remedy that is by increasing ADU building. So, legislation changes that have definitely inspired people to be a bit more open to building detached or back house ADU‚’s. And then, of course, I’ve got to bring up the “C” word: COVID. COVID really changed things for a lot of people.
People realize that now all of a sudden, their family of three or four or five or six living in 1700 or 1800 square feet is difficult. Everybody has work from home, school from home. And it really changed people’s perception on living. And so, a lot of people couldn’t afford to make that stretch to say, Hey, you know what, we need another six or seven or eight hundred square feet. Let’s just sell this house and buy another one. Obviously, price is very, very high. Competition is fierce.
It just wasn’t a reasonable option.
So, more people turn to ADU‚’s, with their house coming down, with ADU construction being streamlined, it’s just a better option for a lot of people. My clients in the last two or three years are specifically starting to request that I help them find properties that are geared.
towards potential ADU building.
And so, you might think, okay, well what is that like? And obviously to me this feels a huge demand and need use because people are thinking about building an ADU, before they even buy the main house. So clearly the demand is there.
So, when clients come to me and say, Joe, I’m looking for a property and I’d like to I’d like to potentially have the option to build an ADU in the future, what should I look for? Typically, you know, we want to see something with a large lot size, roughly over 10,000 square feet. Of course, you can fill you in on a slightly smaller lot, but the larger the lot, the better it’s going to be.
It’s going to provide a sense of privacy for whoever is living in the in the ADU, whether it’s a tenant of a parent or grandparent or a child detached garages are also, another request.
It’s a very efficient way to create an ADU by converting a detached garage, which Joey touched on a little bit earlier.
Side gates and independent entrances into backyards. Some homes have long side yards where an individual like could I say it could be a tenant, could be family member, could be friend. But an occupant of the ADU, if they have the ability to enter that ADU without disturbing the occupants of the main property, it’s just going to be a better fit for both occupants.
Parking. Parking is a big one, obviously. We know from Mr. Reece’s presentation parking may not be required for an ADU, depending on where it is and the type of ADU. But if you can increase the parking on site, whether it’s pouring some more concrete to widen your driveway or not even necessarily building a garage, but maybe a car port, whether it’s hard to obviously,
you know, the way that we get around does change and we’re very walkable city, but obviously we all have cars, so we need to accommodate that. So, if you are in a position where you are a lot greater, you can support your parking. It’s definitely going to add value and demand by where the potential renter is, or the occupant is.
A survey was conducted by Realtor.com found that 42% of homebuyers are interested in purchasing a property with an ADU. So again, as we talk about the growing demand, it’s there almost half of all buyers would like to have something that has a new or at least would consider something that has an ADU.
They also found that 37% of all homeowners who already have an ADU are using as a rental property. So again, we’re talking about over a third of people that have an ADU are using that ADU to provide affordable housing for people in their community and are also able to generate some income from that asset as well.
So next, talk about some factors that influence the value of ADU’s. Of course, we’ve covered a lot of stuff before previously, but the design is really, really important. ADU Design with a specific look and style are going to be more desirable. And when I say they’re going to be more desirable, I mean that kind of a multifaceted approach.
So clearly more desirable if you’re looking to rent it so through tends to be more desirable if you are looking to utilize it for friends and family, obviously they’re going to be more comfortable if that ADU is a little more stylish and is built for high quality. It doesn’t necessarily have to be a specific style.
There are all sorts of styling. You know, mid-century modern is good right now with, you know, lots of glass and posting new style. But honestly, as long as you can conform to the standards in the neighborhood, you can mimic the main house that’s typically going to be the highest value or green features are also really, really important.
As we know, we need to do what we can to help you protect our environment. Energy efficiency come a long way just in the last five or ten years. So, we want to see things with green features that could be solar required. You’re going to want to look at the rules and regulations you have solar on your main house. It is possible that that could be expanded, and you wouldn’t have necessarily have to add solar to the ADU, but you have to local laws, because all ADU laws are different.
Of course, the big one when we talk about value, right. What are the first three rules of real estate? Location, location, location, right. So obviously an ADU in a part of town is more desirable to renters, buyers and sellers. It’s going to have a higher value proposition. Let’s talk about Claremont. You have an ADU in the village, close to the college campuses, close to the downtown area. Clearly, that’s going to have higher demand, a higher value proposition for people looking to rent from that in that area.
Like I mentioned, ADU‚’s having a dedicated path for entry, it’s a big plus for the occupant and the owner. So, when we talk about location, we’re talking about a location in the city, but perhaps location on the lot.
My wife and I, we have a half-acre lot and when we talk about potentially adding an ADU our first thought is in one of the back corners. Of course, setbacks permitting. It provides privacy for us as residents of the main house. It also provides a privacy for the people that are occupying the detached ADU.
So again, location doesn’t necessarily just have to be where your lot is located, is in your city, but also where the ADU is going on that specific lot. Fully detached structures are almost always going to be more desirable than attached structures. It offers much more privacy again for both occupants.
So a lot of things are going to value. Those are some of them. There’s also things like the different amenities they can be provided, So it’s similar to most real estate properties. We talk about adding amenities
and planning and then that specifically will add to the value of the property. They’re going to be very similar between you and main House.
A private outdoor area is huge. Keep in mind,
the people that are going to be looking to rent an ADU or are staying in an ADU. You talk about a rental aspect here for a little bit. There probably going to be the same types of people that will be looking for apartments. A small condos oftentimes get you price point and small condo and apartment price overlap.
So the same type of person that would be looking to rent a small apartment, we’re probably looking to rent an ADU as well with small apartments and condos, we’re seeing more and more of a community space. Outdoor space, community amenities, the big sacrifice and the not being included
in nearly as much. I can understand it from builders’ perspective of course that you outline a spot for a park, pool, playground will probably make more money if it was two or three units. But how does that affect the people that live there?
So by building ADU’s in your own single family lot, if you can provide an outdoor space, whether it’s a patio or a courtyard or something like that for the occupant or tenant, that’s going to be a huge plus because many apartments
and many small condos do not offer that. And it doesn’t need to be a landscaped oasis. It doesn’t have a pool or spa, even if it’s just an area with an outdoor table so that they can enjoy the outdoors. That’s going to be a huge, huge plus.
Parking is important, like we kind of talked about
might not be required, but if you can plan for it, that’s definitely going to add value to the ADU. traditional amenities you can add to the ADU is also going to increase the value.
So for example, it’s also kind of piggybacks that the efficiency aspect of things a little bit. If you can have specialties or the maybe support systems that are very efficient for for each of our tenants occupants, homeowners, appraisers are going to definitely give you a higher value for things like that over a wall or a wall here that’s just not as efficient.
It’s going to be higher utility bills and certainly is not as good for the environment in you have a washer dryer or even a combined units. That’s a big, big plus. And you know, some people I hear, oh, we’re going to do a washer and dryer outside and they’re going to come into the main house and use the washer and dryer. Well, that can work, but obviously not nearly as good as having a washer and dryer in the unit itself.
Essentially, the goal is with the amenities is you really want to try to make that even you feel as legitimate as any other home would. And once you can, you can get to a point where you can walk in and have a tenant walk in and really feel like this can be home and they can stay here for a long time, they tend to be more willing to pay a higher level for rent increases, a little higher, at least a little equity on the sale, better amenities market, it’s going to increase your value.
Speaking of increasing value, let’s talk about property values is probably the one that most people are most interested in. And of course, I must give a bit of a disclosure. It’s very, very difficult to make a blanket statement on how you can increase your value. But what I can say is it would be very difficult to build an ADU and not have an increased equity. You almost have to try to do something like that without much objection an ADU is going to increase your value.
With that being said, you know, the market varies. Neighborhoods vary ADU sizes, configurations and formats, and that is all variable.
All those things are going to affect the value of that. However, some studies have been conducted
to try to guage what the increases equity is, when a homeowner adds an ADU.
The National Association of Realtors mentions that adding an ADU to a property increases value by up to 51%. That’s a huge, huge equity increase. A little bit more conservative estimate
from the Appraisal Institute really quick is kind of interesting.
Appraisal Institute has one idea and realtors have another idea. Not surprisingly, Appraisal Institute found that you can increase the value of property by up to 25%. Even if you see 25% in the low end and 50% on the high end. Anytime you can increase your property value by those figures, it’s hard to say that’s a bad thing. Going back to demand. So if you think about value, a lot of times the value is a function of demand.
So going back to demand, I had several buyer clients in recent years. They stated in their budget is this much let’s just say in fact it is always a recent example of I’m working with right now. And they said, Well, sure, we’d like to stay the $650K – $800K which is a reasonable budget for a home in our area here. And they said, But if the House has an ADU, you know, we go up to $950K or a million. So that shows that there are people that are willing to spend more money to buy a product that’s more expensive because they find utility and value in it.
In fact, my wife and I had the same conversation. We were looking for a house at the time. This was not six years ago now. Seven years ago,
our budget was $350K – $450K. And but we said, well, if we find somebody with an ADU,we will go all the way to $525,000. And so we were willing to stretch as well. And that’s because the buyers know that there is value in ADU‚’s.
There’s value in the utility of the ADU, there’s value of the rental aspect of the ADU, and that the increase in value in our area, a small bedroom I’m sorry, a small studio apartment or a one bedroom. In our area something like a studio or one-bedroom ADU, like a converted garage, you might see a value increase anywhere from $80K to $130,000
Again, a huge range you could use to be more or less. And really depends on the types of finishes you use, how it’s configured, so on and so forth. But if you think to yourself, you know, a good range that you can fairly well consider is $80K to $130,000 and to do a new garage conversion,
which I’m sure going to elaborate on your proposition, there is this you’re looking that you’re going to break even pretty early on.
So we talk about return on investment and getting that money back as soon as it’s done. If you haven’t had your property appraised, you’re going to see a significant value added right off the bat. And that’s before you start taking into consideration possible rent, rental income and the utility that you get from having that in you.
What is that worth? What is it worth to you to have a spot for Mom to come and live and stay with you and still be a part of the family? What’s it worth to have your you know, your adult child has to be able to have their own independent space and not have to try to buy a home at 21 or 22. So there’s all sorts of things that go into that larger use definitely will command more money, more value, add higher quality finishes if they have special features, you know.
If they are in an area like the village or if there is an ADU in Claraboya or a neighborhood that has the view all time, all of those types of things will have value.
And of course, when you go to sell your home, you’re going to see the benefits from that. As we’ve already established, buyers are out there looking for homes with ADU’s. In fact, when you look at listings now, almost every listing on a large lot will say ADU potential because they know it’s a selling point.
So kind of to wrap things up when clients ask me on the real estate side of things should I consider in an ADU, is it worthwhile, is the value proposition there? Pretty much without a doubt it’s a yes. So I would be the back at a Sotheby’s table, if somebody has questions, I’ll be happy to chat with you.
Thanks so much for listening.
All right. Thank you very much, Joe. That was awesome. Very informative.
I just want to touch on a couple of things that just talked about here.
What was the design? And he kind of made sure that he mentioned how important that design is.
And I think a lot of the times when people are exploring building these ADU‚’s, they think that they’re just going to have a cookie cutter box with the same size that you see inside a bathroom, the same size kitchen, and that’s it. Right? And so in our experience, we’ve built
tons of ADU‚’s, and I can tell you that there’s so many options to fit your own personal needs.
The options are really endless, we’ve done one with with large vaulted ceilings. We’ve done single bedrooms, two bedrooms, two bathrooms, larger kitchens, smaller, smaller powder rooms that are accessible from the outside to access from the pool. It’s sort of like the world is your oyster when it comes to that. So just keep that in mind and then I want to share our experience that we had last year.
We built and maybe you for a person over a person over in Rancho Cucamonga, he had just moved to the house and it had appraised for $800,000. Right? We took five months to build a 600 square foot ADU in his side yard. And he had it reappraised at 1.1 million. So that was an immediate return on investment. It was a really awesome decision there.
Okay.
JOEY RASICH:
Next, we are going to start our Q&A session and great invite. All three speakers got up and we encourage all of our attendees to ask whatever questions you might have thought of during this presentation or one of the questions you may think of right the now.
And also I do want to mention that
after this is done, we are going to be hanging around for about 20 to 30 minutes. If you would like to talk to any of my guys or myself or any of our speakers one on one. And I do want to tell everyone, we’ve got a recent customer that we’ve just finished building
and waiting for who has agreed to come to our event. His name is Casey, raise your hand Casey. I think recognizing that we will continue to do that, I the that if any other homeowners or anybody else just wants to ask him a question about his experience. Right.
So without further ado, let’s open up the Q&A and.
QUESTION ONE:
Let me go open up on that and I have two questions for you. I’m sorry. I have two two questions for Mayor Reece. The first is if you’re you’re encouraging ideas, changes are is the city taking some steps to streamline the process by, say, increasing the size of the staff building department?
Because I, as you know, and my husband’s a contractor in Claremont for years, and we’re going through this process now, process very, very slow. And it appears to me because there just isn’t enough staff. And so that’s my first question. And the second.
Second question is. In order to apply for a JADU which is supposed to be within the outlines of your current home, if you’re applying for a room addition, you can’t you can’t even apply for the JADU. until the room addition is done as it as it sits now. But if someone wanted to add
on to the home and. Include a JADU in their home. Wouldn’t it have be a more streamlined process to allow that within the plans?
MAYOR ED REECE:
So let me start with your first question, which was the staffing situation. I will share with you. We are short staffed in the planning Department. We have a lot of things going on throughout the city, in the projects, in the developers projects that are happening
over the colleges as well. And so we are evaluating that. Actually, the city manager is evaluating where we could augment or add additional staff into the planning. Do to see how to increase overall work output So that is certainly under review. And my guess is the city that is going to come back and he’s going to probably recommend adding additional personnel. And so I don’t disagree with your suggestion and that is in the works for you guys. You’re saying why should I think there’s always I think as a city, we should always be looking at opportunities to make these more effective and more streamlined.
And so I you I’m assuming based on your second question, you are doing that. You’re doing it potentially in addition with an ADU. We’re doing an addition, and we’re thinking of doing a JADU as part of it. I’m trying to think. About it right now. Sure. So I would be happy to talk to you offline, and we can talk about your particular situation and we help you work with staff and see if there’s a way to streamline that process. But I think being a efficient and effective is possible within our in light of our planning situation, I would be fully open to be that way.
Thank you.
QUESTION TWO:
My question is also for Mayor Reece, or whether someone before we don’t know. Okay. So, Mayor, again, thank you for your leadership on ADU grant program it‚’s wonderful. I hope it gets to be re-funded so that more people can take advantage of it. My questions is, specifically for the changes that took place last year and how the city has adopted these in light of the parking situation and what there was in the overnight parking restrictions.
Can you speak a bit about the height requirement or the height limitations? Because my understanding is with the changes in the law now, it allows for construction of ADU‚’s over existing garages, which still allows for the retention of the parking spaces.
MAYOR ED REECE:
So it is also my understanding that with the change in the law, there is opportunity to build over that on top of an existing garage and in doing that on our overnight parking requirement will still apply. So you would now be able to park in the street without of purchase an exemption. There’s a limited amount of exemptions per six months, but so that that would have to apply. But in regards to being able to do that, it just goes to the same application that we have regardless of any ADU or Junior ADU change, You and to apply that, to do that over the over the garage. That regulation is outside of
the authority of that of the city council. That is a state allowed option. And say it is as mentioned earlier, the state is really pushing hard to get housing in almost every nook and cranny of every city. And and so this is one way that they believe that we can add additional affordable housing, by allowing a single family residence
that may be in a neighborhood that is one story allowing that
that garage to turn into two stories. So the city has adopted
the higher height limit? We haven’t adopted it. And we were basically told.
Getting one or two more public questions and then we’re going to send everybody back to their booths.
QUESTION THREE:
You spoke about asking for standard ADU designs. What are the benefits of waiting for the city to approve designs. When they do that?
MAYOR ED REECE:
Simple thing, we’re looking at four different designs. And so this will allow any of any property
owner that wants to build an ADU or a Junior ADU, to be able to just come to the table. If you will come to the counter, pick one of those designs and almost expedites. It’s also a fast track, if you will, to allow them to build that that particular design. So there is a significant cost
savings and time savings to the homeowner by doing that.
QUESTION FOUR:
How long do we have to wait for the RFP?
MAYOR ED REECE:
The RFP request is supposed to come in by May and then from there is probably going to take my guess is going to take probably a few months or so. So probably towards the end of this year, we will have approved designs because it will have to go through whatever the designer comes up with that fits or potentially conforms with our community will have to go through the process, through our commission process and likely at the council. So once we get through all that process and probably towards the end of the year, but it will be, I think in the end a great opportunity.
QUESTION FIVE:
For property owners. Yes, to qualify for the federal grant. What is the calculation that’s. Going to be used to determine the affordable rent amount?
MAYOR ED REECE:
So that’s a great question, and I don’t have that calculation with me, but I know staff has it and the board in regards
to what that looks like, is basically taking the calculation that the county provides. And there is a specific calculation based on overall median income. And and then there’s a determination of whether it’s extremely low income housing,
in low income housing, etc.. I don’t have that calculation with me, but I’m happy to get that to you.
TIM HARRISON:
I can tell you that, though, and the guidelines for that $20,000 helping build it, the amount of rent you’re allowed to charge. It is actually very fair. Like for the person that’s building the place. I can tell you right now, after looking at it, and this is where I’m giving him crap, because they won’t let an investor who has a problem because government doesn’t want to use it. But it has to be owner occupied, I guess somewhat fair, but I beat him up about that. But I ran all through and got excited and then said, Oh, now you have to you have to live on the property. But the rents are very fair. it’s only three years.
QUESTION SIX:
So my question was around the practice. Well, we did look into it and it was a limitation and we’ve talked a lot about aging parents. So that was our consideration for our ADU. And if there is a solution where it has
to be somebody that’s not related to, even though you will know if they’re paying rent as the parent that I think the guidelines were, there’s no family, right?
MAYOR ED REECE:
So there is some exclusion. The intent behind the grant program is allowed for opportunity for families, the young families that come in or graduate, which they could be somebody that works here in town. So there is no exclusion on who can be an additional renter who will. Be happy to do that exclusion.
JOEY RASICH:
Let’s give all our speakers a round of applause. All right, as we wrap up our community session, I’d like to take a minute to extend a very heartfelt thank you to our distinguished speakers for their invaluable contributions Today. I remember we very, very, very grateful for their time and your expertise and your willingness to show up and to share your insight. Thank you gentlemen, I would like to thank every single person who came and attended this event for participate. Your enthusiasm and your questions were very valuable, probably to every single person here.
I want to reiterate that here at Gold Coast Solutions it is our job to deliver quality work and customer satisfaction is actually our top priority. We are always here to help. you make your ADU dreams a reality. Even though that sounds very corny. Once again, I want to thank you. for being part of the event. And I want to remind you. that for the next 20 minutes or so, feel free to come up and ask me questions. I’m sure Mayor Ed, Joe, and Tim are happy to entertain any conversation. you guys have after the event. If you have any specific questions about the building process, about the concrete, flooring, plumbing… My guys are more than happy to answer. whatever questions you have as it pertains to construction.
I would like to remind everybody else that we do have a very recently completed ADU customer who will simply stick around and answer whatever questions you have so that I’d like to wrap up.the presentation. And once again, thank you very much for coming.
Event Photos
