7min read
by Olesia Chikunova, ADU Specialist.
You need more space. You are considering a home addition.
There is a house hack that you need to know about.
You have most probably seen me writing previously about accessory dwelling units (ADUs). Why am I writing about regular home additions today? Well, ADU is a house hack for an addition that you might not know about. This is a good example of how our construction concierge can save you money even before you start working with us.
I say to everyone planning a major remodel, build an accessory dwelling unit first (learn how to build an ADU here). Read on why it is not as crazy an idea, as it sounds initially.
TLDR of ADU advantages over a regular addition (both add space and increase property value):
Home addition planning generally refers to the process of designing and drawing up blueprints for an addition to an existing home. This can be a small room, such as a bathroom or kitchen, or a larger space, like a garage or extra bedroom.
Are you considering a home addition? If so, you’re likely excited about the possibilities, but also anxious about the potential challenges. A comprehensive home addition planning guide can make the process easier by helping you understand what to expect and how to prepare. We’ll provide an overview of the key steps in the process and some tips for making your dream a reality. Let’s get started!
The planning process usually begins with an assessment of the needs of the homeowners. This includes taking into account the desired size and layout of the new space, as well as any special features that may be required, such as plumbing, HVAC systems or electrical wiring.
Once the needs of the homeowners have been determined, the next step is to create a floor plan for the new space. This will include specifying the location of walls, doors, and windows, as well as any built-in features that are desired. Finally, once the floor plan has been approved, with the building permit in hand, construction can begin on the new home addition.
House additions are big projects. There are many things you need to take into consideration before you start such as: the cost, the building permit, the zoning of your property, the size and the location of the addition, if you need an architect, a structural engineer, a designer, or a contractor.
First, you need to determine how much money you are willing to spend on this project and if you will need to finance it. Home addition costs vary greatly, and most people use a mix of financial instruments ranging from home equity line of credit and home improvement loan to good old credit cards. Project cost is driven by the type of work required. Second-story addition will be more expensive as it often requires structural work. Laundry room and bathroom addition needs plumbing work and also brings additional costs.
It is important to factor in the cost of permits and other necessary approvals. Consider property taxes – they will increase proportionally to additional square footage. However, significant changes to existing house may trigger re-assessment of your overall property taxes.
You will need to get a building permit from your city or county. Building permits are a separate art form. It all starts with research. Research the zoning of your property so that you know what is allowed to be built on it. Your city ordinance will have front, side and rear yard setback requirements determining how many feet away from the property lines you can build. Some local building codes have plan height requirements and limit the possible height of the building. All this influences where the new addition will be located.
Then think about size of the addition. Local codes will also drive the maximum extra square footage you can add. Do you want it to be an new room, for example a primary bedroom or a new living room? An extension of an existing room? An in-law suite? A detached garage? Remember, these days we have the opportunity to add space not only through conventional additions but also with garage conversions.
To become a good investment and have no issues during permitting process, an addition construction project needs an experienced designer or an architect to develop architectural plans. For additional foundation work you will need to engage a structural engineer.
Will you need a general contractor? If you are going to do most of the work yourself or act as an owner-builder, then you won’t need a contractor. If you are going to hire someone to do most of the work for you, then you will need to get bids from different contractors. Look for home addition contractors who have years of experience – they are the ones who can help you find most cost-effective ways to add needed square feet.
Hire a qualified contractor who has experience building additions. Be sure to get several bids and ask for references before making your final decision. Once construction begins, be sure to stay involved and inspect the work regularly to ensure that it meets your expectations. With a little planning and effort, your home addition will be a success.
If you are overwhelmed by the entire project, you may consider hiring an independent project manager to look out for your interests during the construction.
Knowing what you want ahead of time will make the process go more smoothly. The more details – the better. Great home additions increase property value. Making detailed plans and checklists is a great place to start.
A home addition is a great way to add extra living space to your home. But before you start construction, there are a few things you need to do to ensure the project is successful.
First, your building permit. Every city has their own requirements. Make sure your designer has experience with your city.
Second, your contract with the general contractor. A Must-Have. No questions asked.
Pro Tip: Tie the payments to milestones and city inspections.
Next, building materials. You may be eager to start you project as soon as you got your building permit. But wait – do you have all of the necessary materials on site? Recently, a lot of projects are stalled because of delays on deliveries. Your construction crew leaves the site to start a new project elsewhere and you lose momentum. Ask you contractor for the schedule and items that might stop construction.
Any remodeling or home improvement project involves a certain amount of planning in order to be successful. This is especially true for a home addition, which can be a complex undertaking. By taking the time to develop a detailed plan, you can help ensure that your project stays on track and on budget.
In addition, a well-planned home addition can add value to your property and provide you with the extra space you need to live comfortably. If you are considering a home addition, be sure to consult with a qualified contractor who can help you develop a plan that meets your needs and fits your budget. With proper planning, your home addition can be an enjoyable and rewarding experience.
There are so many people, companies, consultants and agencies involved in building your new house or accessory dwelling unit.
You talk to some of them in the very beginning of the project, and then continue down the home building roadmap to engage contractors, vendors and subcontractors.
Who is the person to make sure the final result – your completed house – is exactly how you thought it would be?
If you do not know who that person is, then it must be you, the homeowner.
The cost of a successful home addition can vary depending on a number of factors, including the size and complexity of the project, the materials used, and the location of the home. However, there are some general guidelines that can help to estimate the cost of a home addition. For instance, in the Bay Area most additions will cost between $300 and $700 per square foot. In some areas (think San Francisco) it can go beyond $1,000 fast.
How can you minimize the tax consequences if the only way forward is an addition?
Strategize with your designer and contractor. Is there anything that needs to be done that the Assessor’s office calls maintenance? Think a distribution panel, sewer line or water meter upgrade. Working on these projects before an addition may feel like you are making the construction project longer, but the tax benefit is there. Remember, you do the addition once, and pay taxes afterwards forever.
You will not be spending less or more per square foot, this is not the point. Labor is expensive, cost of materials has increased, this Bloomberg article has done a good job describing the situation. If you are thinking about a major remodel in California today, you must be either brave or pretty desperate. Or both.
There are two other line items that most miss until it is too late.
One is the cost of additional upgrades to the main house, often required by the city as part of the project. The second is a tax increase on the whole house after you are done with your major remodel. ADUs do not trigger any of it.
Well, #1 is not entirely true. You might need to upgrade a distribution panel to accommodate an additional load from an accessory dwelling unit, or do some work to clean up the sewer system. When you think about it, both sound as side benefits that let you avoid unforeseen expenses down the road. For those new to construction, unforeseen equals “have to be fixed urgently” equals “homeowner is a hostage” equals expensive. Additional benefit: these items do not have the same amount of impact on the main house and everyday life of its residents, as updating all plumbing and electrical fixtures might have.
As for #2, when you decide to add a room to the main house, and do some improvements to it that an Assessor office calls “substantially equivalent to new”, it qualifies as re-appraisable new construction, i.e. higher taxes. If you bought your property more than 15 years ago and are still paying the taxes based on that value, this might come as a very unpleasant costly surprise. Think of a difference between taxes on a home appraised at $300,000 and one appraised at $3,000,000. Feel the difference. And now think of it as an annual expense.
As a side note, adding 800 sq ft in some locations will add ~$1M to the house’s value if the appraiser knows what they are doing. But it will definitely be lower if the quality is shoddy. Let us run a back-of-the-envelope calculation:
Current Property Zestimate: $2,200,000
Current sq ft of primary house: 1200
Price per sq ft: ~$1,833
Say, the ADU adds 800 sq ft at 80% of the primary house value ( it should be higher because it is new construction, but let us be conservative here), which is ~$1,170,000 in additional property value.
Your taxes will go up by the amount spent on construction of the ADU. Your ability to use property valuation for HELOC will go up too.
Mind, the quality will really, really matter for an appraisal. This is not the location to go cheap on the quality of construction and finishes.
If you were thinking of moving out of the house for the length of remodel, you will save money on rental too. Renting is an expense, ADU is an investment that shows up as increased property value as soon as you are done with construction.
Detached is a way to go when you have enough space for the backyard cottage and backyard itself.
If you have a tiny back yard, but a huge front yard, in California you may be allowed to build an ADU in the front. YES.
When the space in the backyard is at the premium, there is another option – an attached accessory dwelling unit. If you do not like the idea of an attached unit for sound insulation reasons, linking your new space with the help of a breezeway might be an interesting solution in restricted space if the city allows.
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While ADU is a the most versatile housing solution, there are situations when they do not work. One example will be a zone with high fire hazard risk and restricted access for a fire department. Another – when you have an easement that runs across the property and does not let place the right size unit with respect to all required setbacks. Heritage trees pose problems for construction too.
Sometimes an ADU or an addition looks very costly – even on a flat lot an ADU can set you back $300,000 or more, now on lots with slopes you will need another $100,000+ for the foundation work, and then some more for hauling away that extra soil that you will dig out. Expensive. But you still need extra space. In this case, ask yourself, if you could take the amount of money that it will cost to build an addition or ADU and sell your current home, would you be able to buy a house of your dreams?
The current market is ruthless not only to first time home buyers. Everybody is talking about Californians leaving the State, and yet California real estate remains as hot as ever. Real estate investors and house flippers compete with first time home buyers. Former luxury condo dwellers compete with those who want to upsize their current homes. I have friends with budgets ranging from $1.5M to $3.5M who cannot find what they need.
To sell and move? Or to stay and build? Know thyself. What sounds easier: packing and unpacking in a new place or living on a construction site in a familiar environment?
And when deciding between a move or a home addition, do not forget the closing costs associated with selling and buying real estate. Check here for all costs associated with building an ADU.
Side note for first time home buyers: please read home inspection reports. This is a potential source of major maintenance expenses. I see people making emotional decisions and closing their eyes on problems with foundations, termite inspections, wiring. There is no doubt, this stuff will catch up with you when you are living in the house. And this is exactly why more than 60% of first-time homebuyers regret their home purchase decision – they underestimate maintenance costs.
My experience tells me that to get the right answer, you need to phrase the question correctly. So, if you come to an architect to discuss the home addition, this is exactly what you will get: a discussion on a way to enlarge an existing house that will take months to pull a permit for. Let us take it one more step back, you will start by looking for an architect to help with your home addition, so the pool of references that you have will include just that: professionals versed in home additions. A limiting factor for your options in today’s market.
I know about it from personal experience. I have been doing my local construction project before I became familiar with the benefits of ADUs, and certainly before I became a certified ADU Specialist. None of the people I talked to mentioned ADUs. And believe me, I talk to a lot of professionals.
Now as I am involved with ADU professionals across the country, there is one takeaway – you need to find people who have done ADU projects before. It is still, what they call, a fairly young “cottage” industry. A builder who has an ADU to show is still a rare bird. If anyone tells you they have built hundreds – run away. There is only one company I know that has been doing it long enough, but they had never answered my emails, so I cannot mention them in good faith (what if you read this, reach out to them and they won’t answer your emails either…). All other companies are making their baby steps.
I have spent last year interviewing ADU professionals in 20+ live events. I have interviewed companies that were mentioned in newspapers as ADU builders before they built their first unit. A Working Group of the Casita Coalition, the only statewide, multi-sector organization that brings together all key players to remove policy barriers for small homes, is starting to build an ADU Registry. Here is what we all agree on – when vetting your ADU builder, ask if they have built homes before in your neighborhood. Note, I have said homes, not ADUs. Talk to their clients. Study the way they make their estimates.
Or let our construction concierge do the work for you. We will help you figure out the trade offs between addition, Accessory Dwelling Unit and Accessory Structure. We have a specialized crew for every option.
So there you have it, our comprehensive home addition planning guide. We hope this has been helpful and gives you a good starting point as you plan your own home addition project. If you have any questions or need help getting started, feel free to reach out to us – we’d be more than happy to help. Good luck!
If you can live without a garage, this may be the less expensive way to add living space. Permits required. Starting at $90,000.
How to convert a garage
If all you need is an extra room for an office, then a simple 120 sf backyard structure may work. Starting at $48,000.
How to build a home office
There are jurisdictions that allow accessory structures with plumbing fixtures. Permits required. Starting at $75,000.
How to build an accessory structure