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Building faster isn’t always better, but a prefab ADU is an exception. Learn why these high-end build-ready homes are saving homeowners time and money.
California Governor Gavin Newsom signed five separate bills addressing accessory dwelling units (ADUs) in October of 2019. Together, they serve to make ADUs faster, easier, and less expensive to install.
The sweeping changes these bills put in place are expected to lead to an explosion of prefab ADU homes across the state in the next few years.
But what are prefab ADUs? Who is using them and why? Here’s what you need to know about this national trend.
What’s the Deal With ADUs?
You may be more familiar with accessory dwelling units by one of their many more colloquial names, such as:
- In-law apartments
- Granny flats
- Carriage houses
- Second suites
No matter what you call them, ADUs have been rapidly gaining in popularity nationwide for a while now.
ADUs spark interest among the general populace because they:
- Provide convenient and cost-effective multi-generational or non-traditional family living arrangements
- Can be a great source of rental income for homeowners
- Create highly attractive and affordable housing options in areas where such properties are scarce
Municipal authorities have been slower to get on the bandwagon but, as Governor Newsom’s recent legislative changes show, they’re starting to come around. For good reason, too. ADU real estate permits allow cities to make the most of existing infrastructure and are proving to be a powerful way to tackle stubborn problems like a lack of affordable housing.
Where Prefab ADUs Come In
Prefab ADUs are the modern version of Sears catalog homes. They are standardized ADUs that buyers can order as a total package and have delivered to their homes and constructed quickly, simply, and cost-effectively.
Don’t let that fool you, however. Build Ready ADUs are anything but cookie-cutter. In fact, most ADU plans are the result of intensive design efforts. They account for and accommodate:
- Modern family and living trends
- Energy-efficient materials and layouts
- Easy integration with existing utilities
- Green Energy setups such as solar power
Many families, for example, are finding ADUs to be an attractive housing option for elderly parents or young adult children. Individual on-site units can offer the independence needed to maintain family harmony with the cost-effectiveness and safety of having the parent or child close by on property you own and control.
Increasingly, prefab ADUs, in particular, is catching the eye of savvy buyers who want to get the most out of their ADU investment.
Why are smart buyers choosing prefab over stick-built ADUs? There are a lot of reasons, but most can be summed up under one of three basic points.
- They save time
- They save money
- They’re less hassle
Prefab ADUs Save Time
When prospective buyers think about using prefab units to save time, they’re usually thinking specifically of construction time. This makes sense. By design, prefab units do go up more quickly than stick-built ones.
Time saved during the construction phase is just the tip of the iceberg, however.
Codes and Permitting
One of the biggest time losses involved in putting up a stick-built ADU is getting the necessary permits and approvals from your local government authority. State and local codes can be complex. If your stick-built design doesn’t meet them, you can quickly find yourself going back and forth in lengthy exchanges with your local authorities, your designer, and your contractor trying to identify the problems, make changes, and resubmit your plans for approval.
Most prefab units, by contrast, are specifically designed to meet common code and safety standards. They come with a well-thought-out blend of lifestyle conveniences already perfectly melded with practical and legal considerations.
In some cases, governmental authorities “pre-approve” a variety of units that comply with their standards and goals for the community. Choosing one of these units can vastly shorten the permitting process.
Another factor that buyers tend to overlook is furnishing the interior of their ADU. Prefab units often come with a variety of finishing options. Selecting a comprehensive inside finishing package from a few flexible options is significantly faster than attempting to design an interior finish from scratch.
Prefab ADUs Save Money
The list of ways prefab ADU homes can save you money is extensive. Here are just a few of the highest-impact examples.
Avoid Design Fees
Unless you are an architect, you’re simply not going to be able to design ADU plans on your own. At an absolute minimum, you will need to work with a designer and a contractor. Depending on where you live and your goals for your property, the average cost for a stick-built ADU can range from $20,000 to $400,000.
Choosing a prefab accessory dwelling units allows you to skip:
- Exterior design fees
- Structural engineering expenses
- Interior design fees
Tax and Penalty Fees
ADU manufacturers make a point of knowing how to interpret and navigate codes, tax law, and other ADU real estate-related legalities. Choosing a prefab accessory dwelling unit gives you access to their expertise.
ADU company representatives can help you make sure that you’ve:
- Chosen a unit appropriate to your property and intentions
- Chosen a unit that is legal and code-compliant in your area
- Selected a safe and appropriate installation plan
All of these will help you avoid hefty penalty fees and fines. They can also help you select units that are the most cost-effective not only in terms of the building process but the long-term tax impact on your property.
When you choose a stick-built ADU, you are at the mercy of highly variable standard construction material prices. Choosing a prefab unit allows you to lock in lower, more consistent pricing.
Prefab manufacturers are set up to take advantage of savings based on their factory locations, consistent labor force, and other factors. They pass those savings on to you. These savings apply to both interior and exterior materials and finishes.
Is an ADU Your Next Investment?
Now that you know the ins and outs of prefab ADUs, it’s time to look at what other smart real estate investments you can make, too. Check out our library of real estate and investment-focused posts for more great information now.