Adding an In-Law Unit to your Home: Possibilities, and Incentives are Available.

By Rachel Puryear, Consulting Attorney and Realtor with Berkshire Hathaway, (DRE 02099554), Mortgage Loan Originator (NMLS 2019354)

With a tight housing market, very low interest rates, and an increasing array of building options; the accessory dwelling unit (ADU) – also colloquially known as an in-law unit or granny flat – is becoming a popular addition to many homes. Maybe you have seen them, have one, lived in one, or maybe you have thought about adding one. If you have thought about adding one, there are of course legal and financial considerations, which this post will give some tips on – including how your CA County might help!

Attractive green and gray backyard cottage as an in-law unit, or accessory dwelling unit.

New laws enacted in California last year required cities and counties to develop plans to incentivize and promote creation of ADU’s that can be offered at affordable rental rates to households defined as having very low to moderate income. The CA Department of Housing and Community Development lists extensive resources and local details for building an ADU on its website here. For instance, San Mateo County’s nonprofit Hello Housing offers the One Stop Shop Pilot Program, providing no-cost support in designing, permitting, and project management for building an ADU – this is definitely a resource to take advantage of!

Adding an ADU offers a number of options for a homeowner: Renting it to make extra income, living in it and renting the main house to fund retirement or save money, keeping adult children or relatives close by who could not otherwise afford to stay, or keeping a caregiver close by while offering greater privacy to someone in need of care.

If you are buying a home and are interested in adding an ADU, a realtor with a legal background and connections with well-established loan brokers could help you evaluate a home’s potential for one. If you are selling, having an ADU of course will boost the potential sales price. If you already have a home and want to add an ADU, and you have good credit and some equity in your home; a cash-out refinance could help you fund adding your ADU. Your humble Free Range Law and Real Estate host can bring an uncommon combination of experience with real estate, law, and finance to assisting you with ADU matters – if you feel led to contact me or refer someone following this post, I gratefully appreciate your reaching out.

Thank you for reading, dear readers; and as always, stay safe out there.

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