Real Estate Round-Up: Building a 'win-win' income scenario…

Real estate has always been known as a “good investment” – if you’re able to hold on to it for a reasonable amount of time. We’ve historically had moments when that ‘reasonable amount of time’ was only a year, but generally speaking, it’s about five to 10 years to allow for the normal cycle of ups and downs to occur.

But with the passage of new laws in 2017, your primary residence can now also be an income producer through the development of an “accessory dwelling unit” (ADU). An ADU can be attached or detached. And, as I’ve mentioned in past articles, we have a housing shortage here in California, so building an ADU is a viable way to help solve the housing problem and boost your monthly income.

Let’s talk details. An ADU is a second dwelling unit on a residential, single family property. The two properties are located on the same piece of property and cannot be sold separately. There have been many terms used over the years like granny flat, casita, guest house, in-law suite, studio apartment, tiny house and more.

The recent changes in zoning codes are making it easier than ever to add an ADU to your property. These units can be built over the garage, attached to the home or free-standing. The unit must have one parking space and have adequate sewer/septic and water service. The unit can have a full kitchen or simply a little kitchenette. With a full kitchen, you can legally rent it out. Overall size is limited to up to 50 percent of the main home with a maximum of 1200 square feet. Where do I sign, right? This is how to get started…

There are two phases really – the design phase and the construction phase. In the design phase, you plan your project. What is your budget? Where are you going to build it? How big will it be? Where will they park? What will it look like? Of course you’ll need some engineers/contractors who know the legalities here, but everyone in our area is fairly savvy to codes and regulations. Once you submit your design and schematics to the county (or city) and get approval, you’re on to – the construction phase.

There are just a few exclusions to the approval of an ADU. There cannot be an existing permitted guest home and there cannot be any open code violations on the property. The unit cannot be used for short-term rentals of less than 30 days and the owner must submit a notarized agreement stating that the owner understands and will abide by the requirements of the zoning ordinance.

So, if you’re seeing your neighbors adding on to their property, ask yourself, is this an opportunity for you too? Why not if you have the means? The ADU will increase the value of your property while allowing you to earn money by renting it out, and you’re helping others by providing more affordable housing options. A total “win-win” for all.

Kim Murphy can be reached at [email protected] or (760) 415-9292 or at 130 N Main Avenue, in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.