ADU Kits: Simplifying Accessory Dwelling Unit Construction

ADU kits are pre-packaged sets of materials and instructions designed to make building an Accessory Dwelling Unit (ADU) easier and more straightforward. They significantly reduce the hassles of planning and sourcing materials, so you can focus on building your extra living space.

In this guide, we’ll look at the different types of ADU kits and design options you can choose from. You’ll also learn about the cost benefits and various financing options available to help fund your project.

What Are ADU Kits?

ADU kits are simplified “home in a box” ― they come with most of what you need to add an extra living space to your property. While the details may vary a bit depending on where you get them, accessory dwelling unit kits generally come with:

• Building Materials: These kits have most of the materials you’ll need, like wood, siding, roofing, windows, doors, and more. Some even include fixtures and finishes, so you’re ready to move right in. While the base kits may not include all finishing materials, you can choose from optional upgrades, such as reinforcements for heavy snow, raised floors, or hurricane-proof framing.
• Step-by-Step Instructions: The kits come with detailed instructions to guide you through the assembly. This makes it doable even if you’re not an experienced builder.
• Customization Options: While the kits are pre-packaged, many offer ways for you to customize the design so you can adjust them to better fit your needs and preferences.

Why Should You Consider ADU Kits?

There are several great reasons to go with an ADU kit when adding extra living space to your property. Here are some of the top benefits:

• Faster Construction: With ADU kits, the pieces come pre-made and ready to put together. The prefabricated, modular approach means your new unit can be built much quicker compared to building from scratch. This can save you a ton of time and labor costs.
• Customizable Designs: ADU kits come in various models and floor plans, so you can pick one that fits your needs and works with your existing property. Many kits also let you customize the design to make it just the way you want.
• Simplified Process: ADU kits are designed to make the whole construction process simpler. For example, many kit manufacturers take care of a lot of the complex processes, such as designing the plans and handling the logistics. This can make the entire construction process a lot simpler, even if you’re not an experienced builder.
• Energy Efficiency: Lots of ADU kit manufacturers use eco-friendly materials and features that help the unit run efficiently. In addition to reducing environmental impact, it also cuts down your energy bills.

Types of ADU Kits

There are three main options to pick from when it comes to ADU kits:

• DIY Kits: These kits give you all the materials and parts you need to build the ADU yourself. They come with detailed instructions, so even if you’re not an expert builder, you can still get it done. This is a good choice if you want to be hands-on with the project.
• Prefabricated Kits: With prefabricated or pre-fab kits, the ADU unit is already partially put together before it gets delivered to your property. That means assembling the unit on-site and installing everything goes a lot faster and requires less work compared to building it all from scratch. If you want to save time and effort, a pre-fab kit could be the way to go.
• Turnkey Solutions: These ADU kits are the most comprehensive. The kit provider takes care of everything for you, including the initial design, getting permits, doing the construction, and even landscaping in some cases. It’s the easiest option but also usually the most expensive. If you want a totally hands-off experience, a turnkey kit might be worth the extra cost.

Which ADU Kit Should You Choose?

The type of ADU kit you choose will depend on your budget, construction expertise, and how involved you want to be in the building process. While DIY kits can help you save more, turnkey solutions offer the easiest overall experience. Pre-fab kits provide a middle ground; they can be assembled a lot quicker but allow you to be more involved in the process than a turnkey approach.

Ultimately, your budget is a huge part of the decision. Thankfully, taking out a RenoFi loan can help you access the funds you need to complete your ADU project, even if you choose a more comprehensive turnkey solution. 

While a traditional 90% LTV HELOC may sound like a viable option to fund a home renovation project, it often doesn’t work because the available equity isn’t enough to tackle your entire wishlist. One way to solve that is to take into account the After Renovation Value of your home and use that to increase the available equity - this is what RenoFi loans do. 

How RenoFi Simplifies ADU Construction

RenoFi is a new 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

How ADU Kits Can Save You Money

ADU kits can provide significant cost savings compared to traditional building methods. Here’s how they can help you save money.

• Reduced Construction Costs: One of the biggest advantages of ADU kits is the simplified construction process. Since the kits come with prefabricated components, there’s less on-site labor involved. This can translate to lower construction costs because you’re paying for fewer hours of skilled labor. Besides, since ADU kit manufacturers purchase materials in bulk, they can sell the kits to you at a discounted rate compared to buying the materials individually.
• Faster Timeline Equals Less Expenses: The modular, prefabricated nature of ADU kits means the entire construction process can be completed much faster than a traditional build. This speedy timeline means you’ll have to pay contractors for fewer days on the job site, which can add up to some serious savings on your labor costs. Plus, you can start using that extra living space or renting it out a lot sooner.
• Simplified Permitting Process: Many ADU kit companies have plans and designs that are already approved by the local authorities. That means the permit process goes way smoother and faster compared to building from scratch. You don’t have to pay for expensive custom architectural drawings, and there’s less risk of delays or issues during the permit phase. Faster permitting means faster construction and lower overall costs for you.
• Energy Efficiency Savings: ADU kits are often designed with a focus on energy efficiency. They come equipped with high-performance insulation, windows, and appliances that can lead to significant long-term savings on your utility bills. Compared to a traditionally built ADU, the energy-efficient features of a kit-based unit can translate to much lower operating costs over time. While you might pay a little more upfront for those high-quality materials, the payoff comes through lower monthly expenses for electricity, heating, and cooling.
• Potential for Increased Property Value: Adding an ADU to your home can boost its overall value by up to 35%, especially if you live in big cities. And since ADU kits provide a streamlined, cost-effective solution, you’re able to maximize that return on investment. This makes an ADU kit a smart financial move, whether you plan to use the extra space yourself or rent it out.

Common Designs of ADU Kits 

When choosing an ADU kit, consider how it will fit with your main house and meet your needs. Here are some popular ADU kit designs:

• Modern: Modern ADU kits often feature clean lines and a minimalist look. They often have big windows, flat roofs, and a mix of materials like metal, glass, and concrete. A modern ADU might be a good choice if you prefer a sleek, contemporary feel and want a space that feels open and airy.
• Contemporary: Contemporary ADU kits combine traditional and modern styles, so they have a bit more dynamic designs. These kits often come with innovative materials and unique architectural features. They might have asymmetrical shapes, mixed roofing styles, and a combination of natural and industrial materials, so they tend to stand out.
• Duplex: Duplex ADU kits are designed for two separate living spaces under one roof. This option is great for making money from rentals or providing housing for extended family members. Each unit in a duplex ADU typically has its own entrance, kitchen, bathroom, and living area, so both occupants have their own fully functional and private space.
• Ranch: Ranch-style ADU kits are single-story designs that focus on simplicity and accessibility. They usually have a straightforward floor plan and big windows, making them great for seniors or people with mobility issues. Consider a ranch-style ADU kit if you prefer a more traditional and easy-to-use living space.

Financing Your ADU Project 

Opting for an ADU kit is usually a quicker way to get your project started and completed, but it’s not cheap. Many homeowners often take out some kind of loan, such as a renovation or construction loan or an ADU-specific loan. 

If you’re lucky, you might find state or local programs that offer grants to encourage ADU development. However, these grants are usually limited in the number of people they can serve or may not be available in many places. Even in California, where there’s a statewide grant program specifically for building ADUs, the funds are usually depleted within days, so it’s tough to get grants.

Another alternative is to get financing from the kit manufacturer. Some kit companies offer in-house financing plans or partner with lenders to help homeowners fund their ADU construction. However, these loan options often come with higher interest rates compared to traditional mortgages.

Don’t worry, though; RenoFi, a licensed mortgage broker, can help you access the funds for your project. You can get any of the following loans to start and complete your ADU from our lending partners:

• RenoFi Home Equity Line of Credit (HELOC)
• RenoFi Fixed Rate Home Equity Loan
• Construction Loan for additions

If you don’t have a lot of savings to complete your ADU project, RenoFi can be a great option to explore for securing the necessary financing.

Building Requirements for ADUs

Although you’re building a secondary unit with a pre-packaged ADU kit, it’s still important to follow certain requirements. Here are a few important rules to be aware of before you start construction:

• Zoning and Lot Size: Your property needs to be zoned for residential use and meet the minimum lot size requirements. The ADU has to be on the same lot as your main house. Check with your local authorities to see what the specific lot size rules are in your area.
• Maximum Size: ADUs usually have size limits based on a percentage of your main house’s floor area. There are also restrictions on the number of bedrooms an ADU can have. Check your local zoning laws for the exact details.
• Setbacks and Height: ADUs must follow the setback, height, and site coverage rules of your zoning district to make sure they don’t overshadow the main house.
• Separate Entrance: If your ADU is attached to your main house, it needs its own separate exterior entrance. Detached ADUs must have their own entrance as well.
• Parking: You’ll typically need at least one extra parking space on your lot for the ADU unless you’re close to public transit.
• Permitting: You’ll need a building permit to construct an ADU. Your permit application has to show that you comply with all local zoning and building codes.
• Utility Connections: ADUs often need separate utility connections for water, sewer, and electricity, although some places may let you share connections with the main house.

Your Next Steps to Building an ADU With Ease

Now that you know how ADU kits make building easier with everything you need in one package, it’s time to take the next step toward making your ADU a reality. 

No matter the financing option you’re considering for your project, RenoFi can help you secure the funds you need to build your ADU. Contact us today to explore your options and start building with confidence.

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.