ADU Construction Checklist for Homeowners

ADU construction needs thorough planning to ensure your structure is solidly built, even though it is smaller than the main house. Building an Accessory Dwelling Unit is a great way to make the most of your property. This extra living space can serve as a place for family or guests to stay or even a rental. While an ADU is typically smaller than the main residence, knowing how to go about its construction is important to make sure everything goes smoothly.

To save you the headaches and costly mistakes that often come with building an ADU, our team at RenoFi has pieced together this handy construction checklist. It will help you get started, keep your project on track, and save you plenty of time and effort.

Choosing the Right ADU for Your Needs

The first thing to do when considering adding an ADU is to understand the different ADU types available. Here’s why: it’ll help you pick the one that best suits your needs and property. ADUs come in different types, including:

• Detached Units: These are standalone structures separate from your main residence. They offer the most privacy but are generally more expensive to construct.
• Attached Units: These units are integrated into the main house, so they share at least one wall. They are generally cheaper to construct than detached units.
• Interior Units: This involves turning an existing space inside your home, such as the garage, basement, attic, or extra bedroom, into a fully functional, independent living space with all the basic amenities.

Before you make a decision, it’s important to research your local zoning laws and regulations. These laws affect where and how you can build your ADU. Zoning laws differ by area, so it’s crucial to check with your local planning office. Here are some things to consider:

• Whether ADUs are allowed in your neighborhood
• Guidelines on building style and materials
• How far ADUs must be from property lines
• Limits on ADU size or height
• Parking requirements

Knowing the Cost of Your ADU

Figuring out how much your ADU will cost can be challenging, especially because the price per square foot can vary a lot. Smaller ADUs often end up costing more per square foot than bigger ones due to economies of scale.

To get a rough idea, find out the price per square foot in your area. Then factor in other costs such as connecting utilities, digging trenches for them, and upgrading your electrical panel. Labor costs can change how much these extras cost, so it’s good to get local estimates.

Ways to Finance Your ADU

The next step is figuring out how to pay for your ADU. Building an ADU can cost a lot, but there are a few ways you can finance it:

Borrowing Against the Value of Your Home

You could take out a renovation loan or refinance your mortgage if you have enough equity in your home. Alternatively, you could take out a Home Equity Line of Credit (HELOC), so it’s easier to borrow only what you need for the different phases of ADU construction. 

If you haven’t built substantial equity in your home to take out a traditional HELOC, don’t worry. You can leverage RenoFi’s HELOC for several times more than what traditional HELOCs offer. RenoFi offers more tailored solutions for your funding needs and allows you to get a lower rate while still increasing your borrowing power. 

Financing With RenoFi

Although a traditional 90% LTV HELOC might seem like a good choice for financing a home renovation project, it often falls short because the available equity is insufficient to cover your entire wishlist. A solution to this problem is to consider the After Renovation Value of your home to boost the available equity – this is precisely what RenoFi loans offer.

RenoFi is the smartest way to finance your ADU project. ADUs not only increase your home’s value after renovation but can also generate rental income. However, ADUs are costly. If you don’t have enough equity in your current home, funding ADU construction with a home equity loan is impossible.

For example, let’s say your current home value is $500,000, and your outstanding mortgage balance is $400,000. You are planning on adding an ADU and expect the value of your home to increase to $640,000. Your current loan-to-value ratio (LTV) is already at 80%, which means that most home equity loans are out of reach because that’s the maximum LTV they allow. So, your borrowing power using your current equity is $0.

RenoFi, on the other hand, would allow you to go as high as 150% LTV of your current value or 90% of your after renovation value, whichever is lower. So, in this example, while using a standard home equity loan results in your borrowing power being $0, a RenoFi loan allows you to borrow up to $176,000 by using the after renovation value of your home!

Get started with your RenoFi loan here

ADU-Specific Loans

Some banks or lenders offer loans just for building ADUs. If you plan to use a prefab/modular ADU, some manufacturers can offer financing for your project.  Here’s what to keep in mind, though: these options may have higher interest rates compared to refinancing or traditional mortgages.

Grants and Incentives

Depending on where you live, there might be programs like the ADU Grant Program in California that can help pay for an ADU. Be sure to check with your state, local government, or local nonprofits to see if there are such grants.

Considerations When Planning the Design and Layout of Your ADU

It’s crucial to carefully plan and design the project to make sure it meets your needs and fits your property. Some of the key considerations in this phase include:

• Purpose: Determine how you’ll use the ADU — whether it’s for personal use, family members, guests, or rental income.
• Layout: Plan how the interior will be set up to make the most use of the space and ensure comfort. Consider factors such as room sizes, how people move around, and easy access.
• Style: Choose a design style that matches your main residence and fits within your neighborhood aesthetic.
• Functionality: Include essential features such as kitchens, bathrooms, and living areas based on your needs and local regulations.

Consider working with designers or architects to help polish your plans and make sure they comply with building codes.

Tips to Get Permits and Approvals for Your ADU

Before you can begin construction on your ADU, make sure to get all the necessary permits and approvals from your local government. This typically means submitting your plans and applications to various departments, such as planning, zoning, building and safety, and any other relevant agencies.

The specific permit requirements will vary depending on your location and the type of ADU you are building. However, some common permits you’ll need include a building permit, electrical permit, plumbing permit, and zoning approval.

The permit process can be complex, but there are some things you can do to make it easier:

• Get in touch with your local planning department early on to understand all the requirements. They can provide you with all the details of what you need to do.
• Consider bringing in a design professional to help prepare permit-ready plans. It saves a ton of time in the long run if your plans are good to go from the start.
• Schedule inspections well in advance. Don’t wait until the last minute or you could end up with delays.
• Be prepared to make revisions to your plans if required by the permit office. Revision requests are quite normal, so don’t stress if they come back with some changes.

Getting the proper permits is important because it’s required by law and ensures your ADU is built safely and up to code. Taking the time to complete this process thoroughly can prevent problems in the future.

Benefits of Working With a Reputable Contractor for Your ADU

To make sure your ADU project goes smoothly, it’s crucial to select an experienced ADU builder. Here’s what to look for when you’re choosing a contractor:

• ADU Experience: Find someone who’s built ADUs before. They should understand the unique design, permitting, and construction requirements for ADUs.
• License and Insurance: Make sure they’re licensed and have good insurance. This protects you from liability if anything goes wrong during construction.
• References and Past Work: Ask the contractor to provide references from clients they’ve worked for before and check out their portfolio of completed projects. This will give you a sense of their quality of work.
• Clear Communication: A good contractor should be responsive, transparent, and clear about the construction process, including when the project timeline and how much it will cost.
• Warranty and Guarantees: See what kind of warranty they offer on their work. It’s good to have protection in case there are problems later on.

Before picking an ADU builder, get estimates from a few different contractors who are licensed and insured. Watch out for unusually low prices, as they might indicate poor workmanship or that there are hidden costs.

Setting Up Utilities for Your ADU

All ADUs require utility connections to be fully functional and independent. Besides, proper utility connections mean your accessory dwelling unit is compliant with local regulations. Here’s what you need to consider:

• Connecting Utilities: Be sure your ADU has access to water, electricity, and sewer services. If your ADU is not all-electric, it should be connected to a gas service. Coordinate with utility providers to arrange connections and ensure compliance with local codes.
• Trenching and Installation: Plan for trenching to lay pipes and cables to connect your ADU to existing utility lines on your property. This may involve digging several trenches, especially if the existing utilities are in different spots around your home. Remember to factor in the time and cost of trenching when creating your project schedule and budget.
• Upgrading Electrical Panels: Check if your current electrical panel can handle the extra load from your ADU. You might need to upgrade to a higher capacity panel, such as from 100 to 200 amps, to meet the increased power demands.
• Solar Panels: Consider adding solar panels to your ADU roof to cut down on energy costs and go green. Solar power can be a great way to help cover your ADU’s energy needs.

Phases of Starting Your ADU Construction

With the planning phase complete, it’s time to actually start building your ADU. Construction typically involves several important phases:

• Site Preparation: This includes tasks like clearing the land, grading, and laying the foundation.
• Framing: The skeleton of the ADU is built, including walls, floors, and roof.
• Exterior Finishes: Siding, roofing, windows, and doors are installed.
• Utilities: Plumbing, electrical, and HVAC systems are roughed in.
• Interior Finishes: Drywall, flooring, cabinetry, and fixtures are installed.
• Final Touches: Painting, trim work, and landscaping are completed.

Throughout the process, keep an eye on the main structural parts, and don’t forget about items like the water heater and HVAC. Make sure they’re installed right since they’re important for your ADU’s function and comfort.

Work closely with your contractor to get a good grasp of the construction timeline. Plan regular site visits to check on progress. Staying involved will help keep the project on track and make sure it turns out the way you want.

Options When Selecting Your Materials

As you get started with building, one of the important decisions you’ll need to make is picking out the finishes and materials for your ADU. This includes selecting things like:

• Roofing
• Flooring
• Appliances
• Light fixtures
• Windows and doors
• Cabinets and countertops

Take some time to look into different options and let your contractor know what you like. The materials you pick will affect how your ADU looks and feels, as well as how long it lasts.

What to Look into When Planning Your Kitchen and Bathroom

Most ADUs will have some type of kitchen and bathroom. You might want to let your contractor choose the layout and finishes, but many homeowners like to personally handpick what goes into these spaces.

Here are some important considerations and decisions you’ll need to make when planning your kitchen and bathroom.

Kitchen

• Organize the kitchen layout to be practical and make sure it allows for efficient workflow
• Choose energy-efficient appliances that fit your space and cooking needs
• Select durable and appealing cabinets and countertops that match your style
• Consider lighting, backsplash options, and other final touches

Bathroom

• Pick tiles, sink cabinets, fixtures, and other finishes that all go well together
• Choose toilets, showerheads, and faucets that save water and money on utility bills
• Make sure there’s enough light and ventilation for comfort and safety
• Add your own style with towel racks, mirrors, and other decorations

Final Inspections and Compliance Checks

The last step in your ADU construction is completing the final inspection and compliance process. You’ll have to complete this step before you can move into your new living space. The final inspection and compliance checks ensure your new living space meets all local building codes and safety standards.

Your local building department will schedule inspections covering the following:

• Foundation and framing
• Electrical, plumbing, and HVAC systems
• Insulation and energy efficiency
• Fire and life safety features
• Final walkthrough

Be ready to make any necessary corrections or adjustments found during these inspections. Close collaboration with your contractor and the building department will make sure the process goes smoothly.

Conclusion

Following this ADU construction checklist will help ensure your project is completed smoothly and efficiently. Remember, if you need assistance financing your ADU, RenoFi is here to help. We’ll be happy to help you access the funds you need to bring your dream project to reality. 

ADUs can be expensive and we want to make sure you have access to the financing you need. RenoFi loans are the perfect solution because they are based on the after renovation value of the property. 

Contact us today to learn more.

RenoFi loans are the smartest way to finance a home renovation project. Unlike traditional loans, which are based on your current home value or require you to refinance your primary mortgage and give up your low rate, RenoFi loans are based on the after-renovation value of your home. This allows you to borrow, on average, 11x more, get a low monthly payment, and keep your low rate on your first mortgage.