As a Realtor and Certified Residential Specialist, I am often asked about which types of home improvement are worthwhile and would add value to the property. An Accessory Dwelling Unit (ADU) is at the top of my list for valuable home improvements.
In fact, I believe ADUs such a worthwhile investment, I built an ADU on my own property in Aina Haina. I spent a year planning, designing and constructing my ADU, learning a lot along the way. I'm proud of the result, and I'm honored to be recognized by the Building Industry Association of Hawaii with the 2020 Accessory Dwelling Unit Residential Remodeling Grand Winner Design & Construction Award.
Here are my top five reasons to build an ADU, and some tips to consider:
1. ADUs add value
An ADU is a separate dwelling with a legal additional kitchen and bath. If your lot size allows for the addition of an ADU, it can add value to your home by offering you the flexibility to generate income, provide housing for family members or even allow you to age in place.
2. ADUs provide housing and support economy
ADUs provide a nice alternative to high-rise condo living, while allowing neighborhoods to diversify by accommodating a variety of ages and income levels.
3. ADU construction creates jobs
I opted to add a large one-bedroom unit of just under 800 square feet on my property. I was amazed at the variety of tradesmen that contributed to the construction, and I felt great about supporting our local economy in this way.
4. ADUs provide income
The most obvious benefit of constructing an ADU is the potential for rental income. This rental unit on your property can be easy to manage, too, since you also live on the property. Yet, an ADU offers more separation and privacy than renting out a room or two inside your home. The rental income generated from an ADU can be used to qualify for your mortgage or a mortgage refinance. Be sure to consult with a lender for specifics.
5. ADU design provides a creative outlet
I attach great value to the creative process and the challenge of a major home improvement project. Whether it’s landscaping, window covering, flooring or updating kitchens and baths, I always have fun and receive value from the process. Think of all you might learn when you take on something like ADU construction!
Tips for designing an ADU
I recommend creating a unit you would love to live in yourself. Choose the best appliances and finishes possible within your budget. A time may come where you will want to make the ADU your home if you want to downsize in the future. This will allow you to minimize your living expenses and rent out your main home for maximum passive income. When designing my ADU, I sought to create an unexpected "wow factor."
You'll also want to check out the City & County of Honolulu's Department of Planning and Permitting's ADU instructions before you begin.
Compared to an 'Ohana unit, an ADU offers more flexibility. The ADU is a legal second dwelling that can be used for many purposes. Besides offering the unit for rent at the market rate to the public, I like knowing the ADU could house adult children, in-laws, extended family, a nanny or a caregiver. I could keep it as a guest suite for visitors, or the ultimate splurge, a dedicated home office. The only caveat is the homeowner must occupy either the main home or the ADU.
If you are not paying cash for your improvements, there are ways to finance the improvement. A Home Equity Line of Credit (HELOC) is a great option. I used an investor HELOC on a separate property to finance part of the construction.
I discovered my neighborhood has gas lines that my home was not tapped in to. We opted for a gas cooktop, tankless gas water heater and a gas dryer for the ADU.
You must provide one off-street parking space for the ADU occupant.
Two households will generate more trash and recyclables. Look into the city rules on requesting extra collection bins.
The ADU does not have a separate TMK, or home address; therefore, you'll need to think about how you will handle mail for your tenant.
There are many experienced professionals who can help you to plan your ADU; just ask! Most are happy to provide a complimentary initial consultation. Not sure where to start? Your Locations agent can point you in the right direction.
Allow at minimum a full year from concept to completion. Have fun and enjoy the process!
My team included: Architect, Keith Cockett & Associates, Inc.; general contractor, Barnett Construction, Inc.; cabinetry by Accent Design & Renovations; Inspired Closets Hawaii; Aloha Aina Landscaping; Michael Torres Photography and Hawkins Biggins Photography.
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