We don't have to look far to feel the housing crisis. Retiring parents, siblings, adult children may be struggling to control and manage housing costs. New ADU ordinances and renovation loans can enable homeowners to build ADUs on their current properties for their loved ones.
Here is an alternate strategy of leveraging real estate equity and enjoying Aging in Place.
Published by Will Johnson · 1 hr · Accessory Dwelling Units are getting traction. Great example in North Park. A step forward to our housing crisis while creating equity and income.
California passed law in 2017 and then updated in 2018 improving the addition of ADU (granny flats). This was driven by local building codes impairing effectiveness and a statewide housing shortage affecting many metropolitan areas. Homeowners can create these additions for family members, or create income to offset mortgage payments or more.
Renovation loans allows addition of income properties. This can be the most cost-effective financing available. There are limitations to the type ADU additions. The ADU must attach or through conversion of utilize existing structure. This could be a garage conversion.
The following is a general guide. You must get specific detail with the local building department and hire an architect as the initial process.
Types of ADU
New, Attached - Allows new addition up to 50% of square footage of existing dwelling, not greater than 1,200 sf.
New, Detached - Allows new addition up to 50% of square footage of existing dwelling, not greater than 1,200 sf.
Conversion, Unconditioned - Typically a garage conversion.
Conversion, Conditioned - Converting living area. Must have separate outside access and setback that complies with fire safety code.
New ADU Featured Changes
Parking - Parking requirements has been of the biggest obstacle in implementing ADUs. The new provision allow more flexibility with location and setbacks restrictions. Allowance for tandem parking and eased setback restriction. The biggest difference is the elimination of off-street parking if the dwelling is within 1/2 mile of public transportation.
Utilities - Not required to have new connections for utilities including electrical, gas, water & sewer. This results in significant savings.
Permit & Connection Fees - Past connection fees reflect costs as a new residential construction. Fees must now be proportional. Another significant price reduction.
Fire Sprinkler - Not required if not existing in current dwelling.
Local Adoption - Although state mandates are mandatory, some local building departments have yet change their local code to reflect these requirements. There may be additional restriction or requirements. Check with your local department.
Owner Occupancy - There may be requirements of owner-occupancy in primary or ADU. This will impact future sale of dwelling.
Short Term Rentals - Some local jurisdiction will have restriction of conditions for short term rental.
It is imperative to check with your local building department for a complete understanding of ADUs.
The past local restrictions impaired many ADU projects. The new allowances will go a long way to make ADUs viable. The cost savings are significant in the tens of thousands of dollars. This is a great time to evaluate an ADU addition.
Local News on ADUs
SD HIGH EXPENSE 10 NEWS
Channel 10 recently reported high connection fees may still be inhibiting the viability of implementing ADUs. San Diego is clearly not keeping track with other Calif. metropolitan Cities. City Council is slow walking rolling back fee reductions.
San Diego responds with high permit/connection fees for ADUS
Chula Vista NBC NEWS
CV council members are making efforts to align state ADU mandate. This includes aggressive fee reductions. Also considering home occupancy requirement.
Learn more about renovation loans. This is a brief webinar to help homeowners, home buyers and real estate professionals understand how renovation loans can fulfill a multitude of real estate needs.
Attend our next Free Webinar, Tuesday Feb., 20th 9:00 am - 10:00 am
Registration required SDrenoloans.eventbrite.com
This will be mute only for all attendees. You can interact with online text questions. I will stay online after the webinar to answer any questions. Also, a short survey will be sent immediately after presentation for additional follow-up or discuss marketing strategies.
FHA increases loan limits in 2018
FHA announced recently increases to their loan limits beginning in 2018. These are based on 115% of median prices subject to other conditions. San Diego county is considered high-costs area.
This is good news not only for standard FHA loans, but will include 203K renovation loans. This is much needed in San Diego area that will open up more neighborhoods that will fall under this new limit.
1 Home - $636,150 $649,750
2 Home - $814,500 $831,800
3 Home - $984,525 $1,005,450
Regarding renovation loans, using a hypothetical $60,000 construction loans the 203K loans will grow into additional zip codes in San Diego county. This will be about 10 more zip codes to a total of 58 zip codes that fall into within the new FHA loan limit.
In 2018 home buyers and realtors will be able to explore more neighborhoods. This will be a significant benefit at a time when inventory is limited.
Renovation loans will create more opportunities by seeking homes that are distressed, outdated or with deferred issues that will create that dream home to the home buyers personal preferences.