If you are a Los Angeles homeowner and are finding that your monthly mortgage payments are taxing you a little too much or simply would like extra income, maybe you should consider going the Granny Flat route also known as ADUs – Accessory Dwelling Units.
So what is an ADU? It is a unit sharing the same land as an existing home built either as a stand-alone unit or say above a garage. There is a severe shortage of housing in California with an average of 80,000 being built annually which is around 100,000 less than needed for the burgeoning population. Los Angeles is particularly hard hit. This includes the rental market which is extremely tight.
If you have been in the market for buying a home in Los Angeles you will notice that often a listing agent will point out that some structure was built or converted without permits. Garages are often the culprit of this. These are the result of strict codes enforced by the city that made building or conversions restrictive. Then in 2016 a bill was passed that made it significantly easier for homeowners to convert their homes. The state would now be in charge of the construction of ADUs which would nullify some of the more severe restrictions cities were leveling. For instance Los Angeles mandated that the maximum size of a granny flat could be 640 sq. ft. The state increased that to 1,200 sq. ft. You can read about the state ordinance here.
So what does all this mean? Those who are struggling making their monthly mortgage payments may be able to find a way to convert part of their home into one of these units to rent out. The rental market in Los Angeles will offer no shortage of potential renters, especially as these smaller units are going to be much less than expensive than a home or apartment. Also, if you have an aging family member who is looking to downsize, moving them into their own unit in your home could be a huge money saver.
Another side effect of this new law is that homes with existing non-permitted units may find it easier and less expensive to get the appropriate approvals. This may help home sales as those prospective buyers who may have been deterred by the fear of being caught with the non-permitted unit in a particular home may be more inclined to buy it, especially if they if they see the income potential from the unit.
If that extra income is drawing you you should definitely look into the possibility of building one of these granny units.
(For more information about and help with the process of permitting a granny flat, contact Ira Belgrade)
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