Chapter 03: How to Build a Mother-In-Law House
There are 3 Steps to building your Accessory Dwelling Unit or Mother In Law House.
Step 1: Feasibility Analysis
In this step you will determine if your property is a good candidate by checking your city zoning and regulations. (See chapter 12 for a list of zoning requirements for cities located in Contra Costa County, CA.) Then you will get construction cost estimates by working with a contractor to get preliminary estimates (before you have to pay for a full set of construction drawings). You will also need to perform a comparable rental analysis during this feasibility stage. You should look up both apartments and small single family units that are for rent in your particular neighborhood. Zillow.com and Padmapper.com are both good sites for this. Once you know that you have enough space and you can build an ADU, have a good estimate of what your costs and rents are going to be, you are ready to run the numbers and see if your yield is sufficient to justify the cost of building. You will find an example proforma included in our 2019 ADU Guide.
Step 2: Financing Your ADU
There are 3-4 ways to finance your ADU (also see chapter 5). One of the best financing options is a renovation loan (Homestyle or FHA 203K). Once you've determined your project cost and scope of work, you can then have your renovation lender run the numbers and make sure you can get approved for the loan.
Our partner lender, Freedomstar Financial, is set up to help you quickly get pre-approved for one of these types of renovation loans. If the renovation loan isn't an option, hopefully you have enough equity in your property to cover the costs of the project with a cash out loan or home equity line of credit. Otherwise you will be looking for savings and friends and family cash.
Step 3: Plan, Permit, & Build
Now it's time to hire an architect and get your plans ready for the permitting process. Once you have your building permit in hand, you can get your contractor started. About six months later you will have a golden goose in your backyard!
The 2019 Guide to Building an ADU in California
(Including Financing Options)
For homeowners who want to make the smartest investment when building a backyard cottage, granny flat, accessory dwelling unit, or garage apartment.