How To: Your Guide to ADUs in San Diego
Accessory dwelling units, or ADUs, have exploded in popularity across California in recent years. Also known as granny flats, in-law units, or backyard cottages, these secondary dwellings on existing residential properties offer an innovative way to add much-needed housing capacity in urban areas.
Here in San Diego, ADUs present a major opportunity to expand affordable rental options in desirable neighborhoods. However, constructing a high-quality ADU still requires significant financing and finding the right contractor.
This guide covers everything you need to know about ADU grants, financing programs, and vetting contractors for your project in San Diego.
What is an ADU?
An ADU is a secondary dwelling unit added to a single-family residential lot. It has its own kitchen, bathroom, living area, and separate entrance. ADUs can be converted from existing spaces like garages or basements, added as attachments to the main house, or built as standalone structures in backyards.
ADUs provide complete independent living spaces for family members, renters, guests, or anyone needing flexible housing. They allow multigenerational living on the same property, create rental income for homeowners, and add affordable units in existing neighborhoods.
The California Department of Housing and Community Development (HCD) oversees statewide ADU regulations. However, local San Diego governments can also add zoning and permit rules tailored to their communities.
Benefits of Adding an ADU in San Diego
Constructing an ADU on your San Diego property comes with many excellent benefits:
- Added rental income – An ADU can generate over $1,000+ in monthly rental income from a long-term tenant or nightly vacation rental depending on local regulations. This extra revenue helps offset mortgage costs and supplements retirement savings.
- Increased property value – Detached ADUs typically add 15-25% to your property’s total value. This boost allows you to build significant equity over time.
- Flexible extra space – An ADU provides self-contained living quarters for relatives, adult children, aging parents, guests, caretakers, or anyone needing temporary housing. The convenience promotes multigenerational living.
- Affordable housing – Adding well-designed ADUs to existing neighborhoods helps expand San Diego’s limited affordable housing stock. This meets growing demand in desirable areas without major new construction.
- Environmental benefits – ADUs promote sustainable growth by utilizing existing infrastructure versus building resource-intensive new developments. Their small size also reduces urban sprawl.
An ADU can be a fantastic addition to your San Diego property with proper planning and permitting.
ADU Financing and Grants in California
Financing is often a major barrier when adding an ADU. Construction costs typically range from $150,000 to $200,000 depending on the ADU’s size, features and location on your lot. While you can use a traditional remodel loan or home equity line of credit, specialized ADU financing and grant programs are also available:
California HCD ADU Grant Program
The California HCD ADU Grant Program provides financial assistance for low to moderate income homeowners constructing ADUs. Qualified recipients can receive up to $40,000 in non-repayable funds covering predevelopment costs like:
- Architectural and engineering plans
- Permitting fees
- Utility connections
- Site preparation
- Impact fees
- Energy reports
This grant money makes a significant dent in upfront planning expenses for eligible homeowners before construction begins.
San Diego Housing Commission ADU Construction Loan
The San Diego Housing Commission’s (SDHC) ADU Finance Program offers affordable construction loans up to $250,000 for qualifying low and moderate income households building ADUs.
Participants work with SDHC’s experienced team for technical assistance during the buildout process. The program helps homeowners successfully navigate planning, permitting, contractor selection, and construction.
Loan repayment terms are structured to meet individual needs. Participating homeowners must also agree to rent their completed ADU at affordable rates for a minimum of seven years.
Finding the Right ADU Builder in San Diego
Partnering with experienced ADU design-builders is critical for staying on time and on budget. Be wary of outfits claiming they can deliver amazing ADUs at the cheapest price per square foot. Instead, prioritize contractors who specialize in ADU projects with proven success completing buildings that match your needs and budget.
Questions to Ask Prospective ADU Builders in San Diego:
- Are you familiar with the local zoning and permit rules in my area? Navigating regulations smoothly is crucial.
- Do you have expertise building detached versus attached ADUs? Make sure they suit your project type.
- What strategies will you use to contain costs within my budget? Watch for creative solutions not just the cheapest materials.
- How will you keep me informed during the design and construction process? Open communication prevents headaches.
- Can you share your typical timeline from design to completion? A 6-9 month schedule is common.
Vet potential ADU builders thoroughly and compare several bids. Don’t sacrifice quality just to save a few dollars upfront.
Key Steps for Building an ADU in San Diego
While each ADU project has unique considerations, most follow this general process from start to finish:
1. Assess your property and decide on an ADU layout – Consider aspects like yard dimensions, zoning rules, existing structures, and electrical/utility capacity. This shapes what ADU size and type works best.
2. Research permit and design requirements for your area – ADU regulations vary across San Diego. Meet with city planners early and learn the specific provisions for your neighborhood.
3. Choose an ADU builder – Once you know project parameters, interview contractors and compare proposals. Focus on experience, realistic costs, and responsiveness.
4. Finalize designs & obtain permits – Your builder will complete architectural plans and submit for permitting. Build community support with neighbors to prevent delays.
5. Secure financing – Apply for ADU grants or loans you may qualify for. Have financing lined up before signing contracts.
6. Construction & completion – Buildout typically takes 6-9 months. Work closely with your ADU contractor throughout the process.
7. Inspection & final approval – The city will inspect your ADU to verify compliance. Make any final fixes needed before approval.
8. Start renting – Once you have the certificate of occupancy, start listing your ADU for rent or move in yourself.
Follow these steps with realistic expectations, and your ADU project should proceed smoothly from start to move-in.
Turn Your San Diego Property Into an Income-Producing Asset
Adding an ADU is one of the best ways to enhance your San Diego property. The additional income, flexibility, and equity can deliver major financial dividends for years to come.
Hopefully, this guide provided you useful insights into navigating the ADU development process from securing financing to hiring the right builder. Our team specializes in high-quality, cost-effective ADU projects that maximize value for homeowners.
Contact us today at Octo Property Services for a free estimate and help to determine if an ADU is right for your property!
