What Multi-Family Investors Need to Know
February 24, 2023
ADU , MULTI-FAMILY , REAL ESTATE INVESTORS
As a multi-family investor, you know how important it is to find new ways to increase your property value and maximize your real estate investment. In this article, we’ll provide an overview of Accessory Dwelling Units (ADUs), multiple ways you can create income using multi-family ADUs, and why it’s easier than ever to install them on your multi-family properties.
An Aerial shot of three Abodu Two ADU units used for multi-fam rentals.
What is an ADU?
ADU stands for Accessory Dwelling Unit. ADUs are permanent structures that provide a fully-appointed living space in the backyard of an existing residential property. They can range from full custom mini-houses with plumbing fixtures and appliances to a dressed-up garage or shed. You might also know them as a backyard home, granny unit, in-law apartment, guest cottage, carriage house, secondary dwelling unit — the list goes on!
Overview of the different kinds of ADUs and how many you can add to a multi-family property
There are two kinds of ADUs that can be built on a multi-family property: detached ADUs and conversion ADUs.
Detached ADUs are completely free standing structures that are not attached to a main multi-family structure. Abodu ADUs are considered detached.
Conversion ADUs convert non-livable existing space in a multi-family structure into a new ADU. For example, a storage room, garage, attic, basement, etc. could all be converted into a conversion ADU.
How many ADUs can I build on my multi-family property in California?
The number of ADUs allowed on a multi-family property depends on what’s already on the lot to begin with. In general, 2 detached ADUs are allowed on a lot with a multi-family residence.The number of conversion ADUs allowed on a multi-family lot depends on how many units already exist. One conversion ADU is always allowed, however beyond that, it depends on the number of units already on the property. Depending on your local jurisdiction, you might be able to have both detached and conversion ADUs added to your lot.
How multi-family investors increase ROI with ADUs
For multi-family investors, ADUs provide a way to make the most of their real estate investment by generating additional cash flow in the short-term and boosting your property value for the long-term:
Increase your property value: The additional livable space created by ADUs boost the square footage of your property.
Accelerate cash flow: ADUs provide a new rentable unit, helping you collect more rent each month on your existing properties
Shorten construction timelines: Prefabricated ADUs significantly simplify the construction process — meaning you’ll start generating more rental income faster.
How California is streamlining ADUs for multi-family investors
To combat California’s housing crisis, state lawmakers passed a number of initiatives in recent years to reduce barriers and streamline approval processes for building ADUs. These laws are especially beneficial to multi-family investors looking to optimize their existing properties.
“With changes in legislation over the past few years, ADUs are going to play a more critical role in the real estate equation.” —Scott Chase, Chief Operating Officer Intero, a national real estate services provider
While these laws include a number of provisions, the major takeaways for California multi-family investors seeking to build ADUs include:
No owner-occupancy requirements: For ADUs approved between January 1, 2020, and January 1, 2025, owner-occupancy requirements are eliminated — paving the way for landlords and mult-ifamily investors to add ADUs to their investment properties.
Shorter approval timelines: Local agencies must now approve ADU applications in 60 days (formerly 120 days).
More lenient size requirements: No matter your jurisdiction, detached ADUs can be built up to 800 square feet, as long as they are less than 16 feet high and respect 4 foot rear and side yard setbacks.
No more impact fees: ADUs smaller than 750 square feet will no longer incur an impact fee.
Limited HOA approval power: HOAs are no longer able to ban or unreasonably restrict the construction of ADUs on single-family lots.
How Abodu works for multi-family investors
If you’re interested in adding an ADU to your multi-family property, Abodu is here to help simplify the process. We provide concierge-level service at every step — from permitting and design to off-site construction, delivery, and installation. Our collection of studio, one-bedroom, and two-bedroom ADUs are designed by world-class architects and include premium, customizable features.
Fast timelines: We work with cities to pre-approve our permits, enabling drastically shorter projects — think 4-6 weeks for permitting, and just 6 months to project completion.
Seamless construction process: Prefabricated ADUs mean simpler construction and less disruption for tenants.
Beautiful designs: Our ADUs boast high-quality Scandinavian design and premium materials.
Straightforward pricing: Our ADUs start at $228,800 with no hidden fees. With the Abodu Pricing Guarantee, if the cost of your project changes, we guarantee that we don’t profit from the change.
And multi-family investors can rest assured that Abodu ADUs are built to state building codes to ensure you increase your property value well beyond the cost of the project.
Add an Abodu ADU in 3 steps:
1 Feasibility Study
We meet you at your property to gather all the necessary onsite information to create a customized proposal for your project.
2 Customize & Build
We handle everything from custom options and upgrades, to permits prior to building your Abodu home.
3 Delivery & Install
We walk you through your new Abodu and explain all the features, bells, whistles, and custom details.
Ready to get started? Get in touch!
Abodu currently offers our full service in the greater San Francisco Bay Area, and Southern California. To find out if we can add space at your place, please fill out the Abodu contact form here and we’ll be in touch.