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Which ADU is Right for me? Ground-Up Construction vs. Garage Conversion

Dustin Edwards • Apr 05, 2024

ADUs are a great way to step into the real estate investment market. Typically, This is because they're cheaper to build than a brand-new house, especially if you’re converting a garage. This means you don't need to invest in a new property to gain a rental. The fact that an ADU is within your property can also help first-time investors manage it themselves. For experienced investors, ADUs can help maximize the income a property can generate.


Below is a list of elements to consider when building a brand-new ADU or converting your garage.


Budget

Your personal build budget is usually the primary factor in deciding which kind of ADU you’re going to build. For those with a tighter budget, a garage conversion will likely be preferable, as, on average, it can cost from $100,000 to $150,000. However, in these cases, you're limited to the dimensions of the original garage. 


While building a brand new ADU does allow for more creativity, you’re still limited by the maximum allowed size of 800 square feet in Long Beach, CA. For a ground-up build, the general average starts at $200,000 and can go as high as $400,000 or more, depending on layout, materials, and
ADU design.


Time

Building a brand new adu or converting a garage into an adu takes time. Both choices provide several pros and cons based on your needs. While converting an existing garage into an ADU may take less time, you’ll likely be limited to the original garage dimensions. However, you’d be able to list and render the ADU much quicker. Ground-up construction may take longer to complete. If you maximized the allowed proportions, you could have a higher rental rate.


Additionally, the permits to convert a garage are approved quicker than those for new construction. This can greatly affect the timeline of your build. If time is not an issue, you can opt for new construction and acquire permits and materials whenever possible.


Garage conversions from when you first talk with a designer can take anywhere from 9 to 14 months if everything moves smoothly. If your plan is to maximize the potential income from renting the ADU, then perhaps the 10 to 18-month time frame for a ground-up ADU build is acceptable. 


Space

Converting a garage may be more practical for homes with limited space than building a new ADU. However, you will sacrifice storage and parking space. Although there's no minimum lot size needed to build an ADU, ideally, you should maximize the available space to improve the rental income from the ADU. Naturally, accommodating a new construction ADU can be more straightforward if your home resides on a more considerable lot of land.


Potential Yield

The amount of time and money invested in your adu can greatly affect its yield. A garage conversion is usually limited in space because of the original building. A two-car garage is, on average, about 500 square feet, roughly the size of a studio or a single-bedroom apartment. Depending on the amenities provided in the rental, you could potentially earn $1,500 to $1,700. 


Using the allowed 800-square-foot layout for a new construction ADU, you can build a two-bedroom, two-bath home. With the larger building, you could potentially see $2,500 or more, once again depending on amenities and
incentives provided to the tenant. Before listing your ADU, remember to do a rental price analysis to ensure it is at a fair market price. This can greatly reduce vacancy periods.


Beginning your real estate journey can feel daunting, though it doesn't have to be the case. If you need more help deciding what kind of ADU is best suited for you or need help managing your ADU, we invite you to call us today at (562) 888-0247 or fill out our
Owner Application online.

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By Dustin Edwards 01 May, 2024
Everyone wants to feel safe in their homes. As an investment property owner, it's up to you to decide whether or not to include security measures in your property. Many of the costs associated with the security measures can be included in the rent, meaning not only can you keep your property safe, but you can earn more income in the long run. However, you would still want your tenants to have renters insurance to protect their assets. Today, we’ll discuss the top five security measures you can add to your property and why they're beneficial to you and your tenant. Security Cameras Cameras are probably one of the first security measures people think about when asked about security. Cameras provide more benefits than just surveillance. They provide an extra level of security for the safety of the tenants and their belongings. Additionally, security cameras can be useful when repairs are required. Cameras can aid in supervising repairs and maintenance to ensure you’re receiving the agreed-upon work. During vacancies when the property is empty, security cameras can help keep the property safe from potential intruders. Doorbell cameras are incredibly popular now. They provide the aforementioned safety of a camera that can be accessed remotely, as well as the ability to communicate with visitors. Although one must be careful never to say you're not home, just say you're unavailable to strangers. Security Lights Security lights with motion detectors are another effective tool when adding security measures to your property. These lights brightly if a potential intruder attempts to get near your home. They can provide enough illumination to see the intruder or, at the very least, scare them off. Nowadays, you can find a combination of security cameras and motion-activated security lights, such as the floodlight cam wired plus from Ring . Additionally, because these lights only turn on when motion is detected, they’re more cost-effective than traditional lights with a switch. Illuminate the Property Light generally deters intruders as it's more difficult to hide. Adding lighting to the landscaping can increase the security of the property while creating a relaxing atmosphere. Lights can also be used in other areas of the property to accent features such as trees, benches, or artwork. This can help your property stand out while giving your tenants an additional feeling of safety. Keyless Entry Keyless entry is seen as both a convenience feature and a security feature. They usually use an electronic passcode, biometric data, or grant access through a smartphone app. Physical keys can be lost, stolen, or duplicated. You reduce the risk of unauthorized entry by eliminating the need for a physical key to enter the property. Many keyless entry systems include several features, such as remote locking and monitoring. Although keyless entry is a great new technology for keeping your tenants and properties safe, they’re best used with other security systems. Security Company Nothing beats having an extra pair of eyes on your property for security. This is where security companies like ADT and SimpliSafe come in. While companies may deal with security in varying ways, they aim to protect your investment. While safety is the primary role of a security company, remember that many tenants may be willing to pay more for a premium amenity like a home security company. Keeping your property and tenants safe is incredibly important to the longevity of an investment property. If you’re looking to improve the security of your Long Beach rental property or need help managing your beach city rental property, we invite you to call us today at (562) 888-0247 or fill out our Owner Application online .
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