How do you budget and finance an ADU? One senior’s story continues.
Our Accessory Dwelling Unit (ADU) story continues with Sally Anne Rudloff in Part 2 of our series on how to build an ADU in Alameda. Sally’s been an Alameda resident & local Realtor for the last 50 years, and is now fast becoming an ADU expert, as she continues her adventure of building her own new smaller home designed to accommodate her needs as an aging senior.
In our 1st installment, we learned the basics of what Sally faced as a newbie to the world of building an ADU. Now we’ll learn details on the actual costs involved, how she created her budget, and went about finding a way to pay for it. The dream comes closer to reality with each step completed. Step inside Sally’s world and learn from her struggles, so you’ll be prepared to take on the challenges you may face if you decide to build your own ADU - a challenging, yet rewarding life experience.
Once again Sally and I discussed her latest challenges, and how she’s managing to stay on track as she continues to navigate this complex task.
How much time (and money) did you budget for building your ADU?
“Basically, I had no idea of what this project would cost when I started. With the outline of my original ‘Cadillac’ plan, the designer at that time said it would be about $500,000. I knew that I absolutely couldn’t do this, so back to the drawing board!!! Before I hired my architect/design firm, Cottage, I was able to get a preliminary figure from their construction company, and I thought, ‘Ok, this is doable.’ The estimate is now about $247,000 to build and another $45,000 for Cottage and Ventures’ design fees. The whole project is expected to end up around $300,000 - $325,000, including permit fees, which allows for some overages and unexpected costs.”
A bit about extra fees and increased construction costs
“I learned that the owner pays all permit fees, which also adds to the total cost of building. But to me, this just made my dream suddenly leap into an eventual reality. With more mandatory research on my future home site because of its location next to the Alameda lagoon, the foundation had to be changed to a different type. First, the soil analysis revealed sandy soil. It wasn’t a surprise to me, having lived in Alameda for over 50 years, but it’s just part of the due diligence of specifying the correct type of foundation needed for the site. Originally it was a slab, but because of the slope of the driveway down to my ADU, the solution was to raise the front height of the foundation. This makes it level and means, just as I always wanted, there will be no need for interior stairs. However, the change also allowed me to add a rear porch and give me more outside space for entertaining - a great bonus!”
What has driven up the cost?
“Any estimate of what it will cost to build your ADU depends on the final items you choose to put into the house - the ‘finishing touches.’ You can choose high-end, low-end, or something in-between for your appliances, finishes, faucets, tubs, etc. All of these choices go into creating the final price to build. I got three iterations of my design before we created the ‘final’ blueprints for construction.”
How are you financing the construction of your ADU?
“I thought about re-financing my Victorian to pay for the ADU, but since I am self-employed and at the end of my real estate career, I would not qualify for a large loan to finance this project. I would not be able to cover the monthly mortgage payments that would be necessary for such a loan. I decided after much research that a reverse mortgage would pay for me to realize my dream. While it would put a burden on my children when they inherited the property, my property would appreciate enough to pay off the balance and live in the Victorian while renting out the ADU for rental income. This was the best solution for me personally. You might seek an alternative solution. It all depends on how you have your money tied up.”
Has the process been worth it so far?
“I haven’t started construction yet, but I’m no longer looking at a dilapidated garage, so that alone is worth it to me. I see what my beautiful view from the ADU will be and I’m over-the-top excited. And most of all, I kick myself for not starting on this earlier, but I know I’ve made the right decision for me!”
What are the next steps in the ADU process for you?
“We submitted the permit to build in early March. It has now been sent back from Alameda’s planning department to my design firm 3 times. Even though it’s a normal part of the process, every small issue creates a change request that results in another 3 week delay. Delays, delays, delays...it really has been a frustrating experience. Looking forward, we fervently hope to begin construction by late June or early July. According to Cottage’s timeline, the build should take 4 - 4.5 months, so by November I should be hosting an open house celebrating the completion of my dream. Fingers crossed, crossed, and crossed.”
What tips would you give someone considering building an ADU?
“Do your research. Picture in your mind what you’d like your ADU to look like. Assess the qualities of the property you have and take advantage of its strengths and options. Consider what your personal needs will be over the time you’ll be living there. Realize that your health will change over time and that the ADU needs to anticipate your needs as they change.”
“For example, I’m a bath person. In my current situation, I have both a separate shower and a tub. In my new ADU, at first, I wanted a tub and a shower. Then just a shower, but I knew I would really miss my tub. What‘s my solution? I’m now getting a walk-in tub with a shower attachment. It’s the perfect outcome for me, but I really had to identify what I wanted in my new place.”
What’s next for Sally and her ADU?
I hope you’re enjoying getting to know Sally and feel like you’re gaining a first-hand look at what it takes to get an Alameda ADU off the ground. Look out for Part 3 of Sally’s journey where we’ll focus on the pitfalls and problems of building an ADU in Alameda. Her goal is to both alert and hopefully, help you avoid the delays and frustrations she’s endured.
In the meantime, Sally soldiers on each day looking forward to the start of construction, all while dealing with the inevitable ups and downs of building an ADU. Until next time!
Photo credits: Shannon Reese