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How to Build an ADU on Your Property

There are a few different ways ADU structures are built. The three most common are: Conventional Stick Framing, Framing Package, and Prefab.

1. Conventional Stick Framing

Stick framing is the term used to describe when a builder buys lumber from a hardware store in standard industry dimensions and assembles it on site. This method is considered the more conventional way. Each individual piece is measured, cut, and joined together with recommended fastening methods. Conventional stick framing uses more manpower than other methods. This method is commonly used by builders as changes are easily made during construction such as design changes. Typically, a civil engineer needs to supervise to make sure the builders are following the plan. However, there is a disadvantage such as it takes longer to construct and needs more supervision. A longer period of time usually means the expenses go up, weather conditions may change and risks in safety are prolonged. However, even with these disadvantages, conventional stick framing offers the most flexibility in the design and layout of the ADU. If you are looking to extensively alter an existing garage into an ADU, or even adding onto an existing building, this option is likely going to be the best choice.

2. Framing Packages

Framing package simply means that all or part of the framing components are pre-cut in a factory and sent to your home. These can either be in loose pieces marked on how to assemble or pre-assembled in sections of (i.e. wall, floor, roof frames, etc.) to be assembled on site. Your construction structural plan which is designed by a structural engineer is sent to a framing engineer. The framing engineer and structural engineer will also determine which parts of the framing plans can be pre-assembled in the factory or sent as individual pieces. Depending on the ADU’s design, the structural engineer would specify which job items are to be prepared onsite ahead of the framing package being delivered. Considering the costs and other factors involving the construction, the structural engineer can provide recommendations on which parts should be ordered as a framing package and which items are better suited to conventional stick framing. It is becoming very common to combine components of both the conventional stick framing and frame package methods. However, frame package prices are more expensive when you first purchase it. With numerous companies offering these frame packages, costs are decreasing. This process also gives the benefit of limited waste, jobsite cleaning and errors in fabrication.

3. Prefab Units

If you are looking to build an ADU entirely from scratch, prefabrication is another option. However, it is important to note that this is the least flexible, in terms of layout and options. The upside is it offers you a convenient way of having your ADU entirely built in a factory and delivered to the location as a whole unit or with very minimal assembly.

After the architect, structural engineer, framing engineer and civil engineer have reviewed and finalized the plans, they are sent to the prefab company and costing and schedules will be calculated. Prefab units have everything installed before it is delivered including mechanical, plumbing, and electrical.

Prefab is typically more cost effective than other methods as costs are determined at an early stage. There are very limited to no variables involved in the costing process. A big advantage to this method is that you or the structural engineer can inspect the ADU during and after fabrication.

Lastly, if you are converting a garage or basement for your ADU, you will most likely be reusing some or all of the framing and the foundation. It is recommended to have a brief on-site visit by a structural engineer who can help determine whether the existing structure can be re-used or needs to be replaced. It is common that you will need to have new exterior doors, windows layout, and new interior walls to divide up the rooms. This will generally require a seismic retrofit. This is usually in the form of shear wall sheathing and nailing, and new retrofitted foundation anchors. Finally, if the plans for the ADU requires adding onto an existing building (such as added to the square footage, adding a deck, or second story), then extensive structural work would also be required.

What are the Costs of building ADU's?

The cost of the building will depend on the design of the home and the quality of the building materials. Prices are all over the map and can range from $20K to $400K and more. Also, the cost of construction for the same structure can vary greatly depending on the builder and region you live in. It will also largely depend on what type of structure we’re talking about. A basement ADU conversion is a totally different animal than an ADU above a garage. These factors all make estimating the “average cost of an ADU” very difficult. However, there are rough estimates of how much it will cost per square foot which is anywhere from $200 to $400.

Most homeowners take advantage of the many lending packages available. These can entail cash-out refinance, VA, a home equity line

of credit or even a 203(k)-construction loan.

FHA and Fannie Mae loans have some unique offerings for ADU and renovation loans. FHA has a financing program called the 203K loan and Fannie Mae’s program is called a Homestyle loan. However, not every lender offers these programs so you will need to do some searching to find the right lender. At Shtil Group, our mortgage brokerage offers both the FHA 203K and the Fannie Mae Homestyle Conventional renovation loans. These are both very popular choices among homeowners in LA and Southern California. Both these programs will allow you to finance both the purchase of the home and the costs of remodeling, building an ADU, or converting your garage in 1 single loan. Also, they are guaranteed by government agencies which means the loan amounts can be generous. For example, they may allow you to borrow up to 97% of the value of the home and up to 75% of the value of the ‘additional’ value that is projected from the ADU. The interest rate is likely to be slightly higher than average and there will be additional closing costs relative to a conventional loan. In addition to that the lender will require the information on your contractors, architectural plans, budgets and more. These loans usually allow 6 months for completion, but extension is available in case of delays. Your monthly payments will begin right away, and you cannot live in your home during the project. You can finance a few months of payments into the mortgage to defer the start of repayments. The draw process to pay the contractor is the same as a construction loan. This means the lender will only release payments to the contractor in portions based on their progress, which is verified in person by an inspector.

Here are some sites where you can design your own ADU:

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