Why build an ADU or a Granny Flat in Los Angeles?

As of January 2020, new California state laws took effect that make it considerably easier to build Accessory Dwelling Units (ADUs, also commonly referred as “granny flats”, “in-law units” or “secondary units”.) This could prove to be a major step towards solving the housing crisis of California.

The city of Los Angeles has a major housing crisis. A recent report showed that the number of homeless people in the city have increased from 33,423 in 2010 to nearly 60,000 in 2019, even in spite of a drop in homelessness nationally. The problem is in part due to the high price of rent in LA. The average rent for an apartment in Los Angeles is $2500 which is a 5% increase from last year’s $2,120.

From Beverly Grove to Glendale, the problem affects the majority of people living in the city. The U.S. Department of Housing and Urban Development classify an Affordable Dwelling as, "housing on which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities." Nearly 60% of the citizens of Los Angeles spend over this budget on housing, leading to drastic demand for new affordable housing to be built. The new ADU laws give the homeowners the opportunity to maximize the income potential of their properties and address the housing crisis at the same time.

An ADU is a second unit added to an existing residential property. It is a fully functional apartment with a kitchen, bathroom, living space, and at least one bedroom. ADU construction is rapidly growing across the state thanks to newly relaxed legislation. ADUs can be rented out to tenants, creating an opportunity for additional or supplemental rental income.

ADU development costs are lower than normal housing because they are small, require no new land, and require fewer construction materials. They are also much faster to build, and use existing infrastructure. ADUs with 1-2 bedrooms in your backyard can increase a property’s value by 10-30% within Los Angeles city limits. Homeowners can earn about $1,950 a month for a 1 bedroom ADU and about $2,750 a month for a 2 bedroom ADU in passive rental income.

Building an ADU is win-win for Los Angeles homeowners and its renters. It creates an opportunity for homeowners to generate new passive income while increasing the housing supply in the city. This should temper rapidly rising rental prices over the long term.

Are you interested in building an ADU on your Los Angles property? Find out whether you are eligible by searching your address on Housable’s free property check tool. It's non-committal, your information is not shared with third parties.

Types of ADUs

You have three options when deciding what kind of ADU to build. Detached, attached, and conversion.

A detached ADU is a newly constructed unit separate from the primary home.

An attached ADU is a newly constructed unit attached to the primary home.

A conversion ADU is existing space within a primary residence, garage or secondary structure that is converted into an independent living unit. Read here to see additional differences in ADUs!

The cost per-square-foot of an ADU is similar to any new residential construction which can be about $150/sqft to $500/sqft for builder basic finishes: two-color paint, carpeting, stainless steel, sheet mirrors, and granite countertops. Of course, there are a lot of variations to this rough estimate depending upon the site condition and a lot of other factors.

ADU Pre-Requisites

You can most likely add some form of ADU to your property if you meet these requirements:

  • A single family home exists on the property.
  • The home has one of the following:
  • A large enough space in the rear yard.
  • A garage or accessory structure in your backyard.
  • A room that can be converted into a unit with its own entrance.

  • You need to be aware of ADU zoning restrictions and regulations in your neighborhood before building an ADU. Check your local zoning by searching your city on the Housable homepage, where you will find everything you need to know about your city or town.

    ADU Growth in Los Angeles

    Los Angeles saw a 30 fold increase in total ADU permits after state laws changed. ADUs are now upwards of 20% of all new construction in the state. The Los Angeles ADU boom is here. If you’d like to get in on the action, take the first step on your project with Housable.