ADU Conversion: Step-by-Step Guide Made Simple

ADU conversion is a cost-effective and practical living solution, more affordable than standard ADUs, and is rapidly gaining popularity in the housing market. These dwelling units help transform existing areas, such as garages and carports, into functional living spaces.

This article is a comprehensive guide that details everything you need to know about ADU conversions. We discuss the differences between standard and converted ADUs and their potential benefits, and we provide a step-by-step guide about their construction and other prerequisites. 

Garage Conversion vs. New Construction ADUs

Accessory dwelling units have recently become the new norm with the benefits and value they add to the homeowner’s property. These self-contained dwelling units are constructed on the same lot as the main house and offer livable spaces for family members and renters. 

ADUs come in all sorts of shapes and sizes. These granny flats can either be built, attached, or detached from the primary dwelling. Another in-demand style of ADU is garage conversion which constructs the additional unit after refurbishment of existing parking spaces. 

These secondary units can be added to already-built, inhabitable structures, including basements, attics, carports, and garages. ADU garage conversions are ideal choices for landlords interested in maximizing the potential of their property in limited spaces without undertaking major construction projects. 

However, developing ADU conversions is a complicated process that requires several permits and requirements to be met. This is where we at RenoFi come in. Our qualified team provides the necessary guidance and expertise to navigate regional regulations and effortlessly complete a converted ADU project with the right funding.

Benefits of ADU Conversions

ADU garage conversions are an innovative living solution that comes with a multitude of benefits for the homeowner. Let’s take a look at the major advantages of repurposing any existing structure into an accessory dwelling unit:

Increased Property Value

An essential benefit of transforming an inhabitable area into a versatile, livable space is the value it adds to the homeowner’s property. Potential buyers seek out ADU garage conversions because they can house visitors or generate extra rental income by using the unit as Airbnb. 

Properties with ADU conversion offer a significantly high return value on investment, more so than that of a home renovation project. Our team at RenoFi is well-equipped to finance various ADU styles and create a granny flat that balances affordability and functionality for the owner.

Low Construction Cost

The construction costs of an ADU account for almost 90% of the total project expenses. By using an already-built structure, garage conversions help the homeowner save a considerable amount and avoid the complexities involved with building a new unit from scratch.

In addition, these transformed units lower the costs associated with laying down the foundation, roofing, and framing of the unit. To put it simply, ADU conversions are relatively cheaper to build compared to the installation of standard attached or detached ADUs. 

The current condition of the garage can also positively or adversely impact the project’s financial cost. Dealing with weak and ancient structures may require substantial rehabilitation work, adding to the total expenses. 

Time Savings

Along with cost, ADU garage conversions also significantly contribute to time savings for the property owner. The main reason for this is that garage conversions obtain an ADU permit in a much shorter time in contrast to the dragged-out permitting process of standard ADUs. 

The construction timeline for these secondary dwelling units is also quite fast, accredited to the pre-built foundation. These features make ADU conversions a good option for investors with strict time and budget constraints but willing to make the most out of the multifunctional in-law suites.

Factors to Consider When Building an ADU Conversion

Various features play a crucial role in elevating the reward and success of the final converted ADU. A thorough understanding of these considerations helps make the ADU planning and development journey straightforward and hassle-free. These factors include:

Local Zoning and Permitting Laws

While ADU conversions have become increasingly common, different municipalities have differing conditions regarding their construction. These include regulations such as height limits, setbacks, parking requirements, and owner-occupancy laws that the landlord must adhere to during the conversion procedure. 

In addition, when converted from an attached garage, the ADU’s size must be the same as the preexisting structure, whereas detached garages can support an additional 150 sq ft. Research and familiarize yourself with the local regulations to plan an ADU design that complies with these requirements and prevents legal issues during the building process.

Structural Assessment of the Garage

It is essential to inspect the structural integrity of the existing compound before proceeding with the ADU transformation. The garage’s foundation, roofing, plumbing, and wiring must also be evaluated to determine its suitability for conversion. 

A structural engineer can also help assess the condition of the existing garage and recommend required reinforcements and repairs. They may also look out for termites, mold, and foundation damages to decide whether it will be cheaper to get updates or demolish the area and start anew.

Design and Layout

An ADU must be designed to optimize the available space and comfort levels while aligning with the aesthetics of the main residence. Consider the dimensions of the garage and the type of occupants the granny flat will host (guests, renters, or aging parents) before finalizing its layout. 

Some other factors, like the placement of windows, doors, bathrooms, and kitchen, can boost the flow of the place and bring in ventilation and natural light. Aim for an ADU design that is comfortable, functional, and suitable to your and your occupant’s needs.

Cost of ADU Conversions

Estimating the total cost of an ADU conversion is a complex process since it depends on various factors. When it comes to building ADUs from garages, the per square foot cost can be anywhere between $25 and $75, whereas the final cost ranges from $60,000 up to $165,000.

Features that contribute heavily to the gross project expenses include construction costs, permitting and administrative fees, installation of utilities and amenities, and finishing materials used. Conversion of older garages can also significantly influence the price since they require additional work to adhere to the present building codes. 

In addition, deciding between a simple and modest, high-end or full custom rebuild plan can also impact the ADU budget. A simple plan is the fastest and cheapest ADU conversion type, priced around $100,000, that leaves the pre-built garage 100% intact. 

Next is the high-end plan that requires minimal structural upgrades and costs approximately $150,000 or more. Last is the custom rebuild design that demolishes the existing car area and starts rebuilding from scratch. This is the most expensive option, with a price of $280,000+.

Experienced builders and estimators can provide a precise cost breakdown according to your specific ADU plan and help you establish a realistic budget for the conversion project.

Financing Your ADU Conversion With RenoFi

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

Steps to Convert an ADU From an Existing Garage

The conversion of an ADU from a present parking space is an effective solution to the housing problem and opens up vast opportunities for homeowners. However, the revamping and building process should be executed only after meticulous planning and supervision from experts such as those at Renofi.

Our team recognizes the potential of ADU conversions and is committed to assisting you with the complexities involved in its development. We guide you about the right floor plan, local codes, and energy standards to craft a dwelling unit that enriches the living experience. 

That said, let’s walk you through the major stages involved in the conversion of a garage into a welcoming and functional accessory dwelling unit:

1.    Design the ADU Plan

Start by exploring resources such as online design platforms, magazines, and architectural blogs to gain ideas for the ADU design. Next, engage a qualified architect to devise a detailed design plan for the ADU garage conversion. These professionals assess the garage’s unique characteristics and combine the design inspiration with the regional building laws.

2.    Obtain Licenses and Permits

It is mandatory to obtain the required state-specific permits and licenses before starting the ADU rehabilitation project. These permits vary depending on where the garage is situated but generally include the submission of construction plans and structural reports to the local agencies.

Other mandatory licenses required by most states contain building, electrical, plumbing, and ADU permits. Skilled professionals help you learn about a particular jurisdiction’s building codes and streamline the permit process.

3.    Renovate and Construct

After obtaining the required permits, it is time to start the construction of the accessory dwelling unit. This step can be divided into the demolition and framing stages. During demolition, elements such as doors, windows, and fixtures that are not needed for the ADU are removed from the garage. 

Certain modifications are also made to the area to facilitate new doors, windows, and other additional components. After this, framing starts, which focuses on building new walls, sections, and other structural features according to the approved design plan. 

Hiring licensed and experienced contractors helps make the repurposing of the unit simple and trouble-free. These contractors also supervise the project, handle rising problems, and stick precisely to the designed ADU layout.

4.    Provide Utility Connections

Once the carport has successfully transitioned into a livable sanctuary, it is time to install basic water, gas, electric, and other utility connections. Coordinate with certified electricians to install wiring systems, including switches and outlets in the granny flat. 

Hire plumbers for sanitation fixtures such as toilets, sinks, and showers, and consider insulating the ceilings and floor to regulate temperature.

5.    Add Flooring and Finishes

The final stages of the ADU renovation project consist of incorporating design elements like the flooring material and finishing colors to breathe life into the newly converted dwelling unit. Pick between a laminated, hardwood, vinyl, or tiled floor, depending on the project budget and aesthetics.

Secondly, decide whether you prefer a painted or wallpaper wall finish and the appropriate texture, pattern, and color. Consider the interior decor and features like lightning, airflow, and comfort to determine the visual appeal of the self-contained space as per your style.

6.    Maintenance and Upkeep

Successful construction of the garage-converted ADU does not mark the completion of the project. Instead, these secondary in-law suites require regular maintenance to preserve their value and functionality for the coming years.

Upkeep of ADU conversions requires routine inspections for any possible cracks, leaks, or wear and tear problems. It also needs regular cleaning using appropriate supplies that don’t damage the materials and surfaces inside the granny flat. 

If the ADU features an outdoor patio or deck, then ensure that the grass is trimmed, the gutters are cleaned, and the exterior looks polished. Lastly, in case the ADU uses an HVAC system, remember to get it serviced after timed intervals. Maintaining these habits can increase the longevity of the ADU and prevent bigger problems in the long run.

Conclusion

ADU conversions present an exceptional way to maximize the available space on the property by transforming abandoned parking spaces into comfortable living sanctuaries. These dwelling units have a shorter build timeframe, are cost-effective, and promise great return on investments.

However, reforming a garage into an ADU is an elaborate process and one that must be done under the right guidelines and supervision. This is where RenoFi comes into the picture. Our goal is to support you throughout the ADU planning and building journey to obtain an outcome that complies with your requirements and the local laws.

Alongside this, RenoFi loans offer a smart method to finance various home renovation projects. Our loans focus on the after-renovation value of the property rather than the conventional loans that deal with the existing home value and require you to give up the low mortgage rates. This scheme lets you borrow approximately 11 times more, get a minimum monthly pay, and keep up the low rate of your first mortgage. 

Follow our step-by-step guide about building an ADU conversion from scratch, browse through our pre-approved design plans, and kickstart the renovation project the right way!