Interested in investing in real estate? Start with ADU

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Brian Johnson
2021 President
Association of Realtors of Santa Barbara

Have you thought about buying real estate as an investment? Have you looked at the ever-increasing property prices lately and thought you couldn’t afford it? A simple solution may be right in front of you or, more appropriately, right under your feet. If you own a home, chances are you can add an additional living unit (ADU) to your property and rent it out to generate investment income. ADU is another residence on the same lot as the main house. This can be a part of the house already attached to it or a separate structure. In the past, ADUs were often referred to as “grandmother squads” and “mother-in-law”.

The State of California is making it easier for homeowners to add ADUs to their properties in an effort to combat the housing crisis we are currently facing. In the past, local laws did more to prohibit ADUs. Now the state is making it harder for municipalities to abandon them if they meet legal design standards. This has led to an explosive growth in ADU approvals across the state. Permits are quicker and easier to issue, and homeowners can complete new housing in less time. This saves money and makes it more affordable to build. Homeowners still have to follow the rules for size and design, but this allows more people to build them.

With the average home price in Santa Barbara in excess of a million dollars, it makes sense for homeowners to add ADUs whenever possible. This makes it easier to enter the world of real estate investment, as far more people can afford ADU 100,000 than a $ 1 million investment property. It is also much easier to be the manager of one unit when he first starts working. In addition, by adding ADU, you increase the value of the property as a whole. By selling real estate, you can easily recoup your initial investment.

Brian Johnson is a California Licensed Real Estate Agent and Managing Director of Radius Commercial Real Estate. Brian deals with all types of commercial real estate transactions, but pays special attention to investments in apartment buildings. You can contact him by phone 805-879-9631 or bjohnson@radiusgroup.com



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