Prices may vary , depending on city costs
Below is the financial analysis of the project, based on the property evaluation as of 05-14-2018
Existing property – 2360
Existing property value – $811,000.00
ADU ———- 1200 Desired ADU square footage
ADU design cost —— $7- Minimum design fee for garage conversion starts from $3500.00 (7 or 8)
ADU permit cost —— $8
ADU construction cost —- $150 – today average price per Sq. Ft
ADU loan annual rate – 4.5% – It’s depends on your credit history
ADU loan terms —- 30 — It’s up to your goals, early loan payoff or extra cash on hands today
Estimated rent value for ADU — $2600.00- To date comparable price for same kind rental property in your area
ADU Building Cost – 198,000 – The construction cost of the ADU includes construction (contractors, materials and labor), design and engineering plans, permits and other municipality fees.
Value of ADU after compilation — To estimate the property’s value increase after the construction of the ADU, we multiply the property’s per-square-foot value by the total size of the addition, and calculate 70%-90% of this product. In this case, the estimated value increase is 90% of ($344sq.ft. x 1200sq.ft), equaling $371,136.
Immediately equity appreciation — $173,136- Net equity increase: $371,136 – $198,000 = $173,136
Instant Property Value Increase – 1,181,000 – The total property value after the ADU construction will be ($811,000 + $371,136) = $1,182,136
Property Tax Increase — The property tax is not calculated based on the full new property value ($1,181,000) but rather only the additional construction cost ($1,009,000), so there is an additional tax advantage and savings from building an ADU (a net increase of $173,136 in property value which is not taxed).
Supplemental Income — The ADU can be rented out for additional income, which is estimated from local real estate rental market. In this case, a 1200 sq. ft. 2-bedroom, 2-bathroom space can be rented for approximately $2600 per month. The ADU rental will generate (12 x $2600) = $31,200 of additional annual income for the property owner.