If you’ve been following our blog and newsletters for a while, you’re probably fairly familiar with the concept of the Accessory Dwelling Unit (ADU). So, let’s say you’re interested in the potential that could bring to your property. What happens next?
To help simplify your fact-finding process we’ve put together a few key things to have in place to prepare for the addition of an ADU.
Here are four steps to help ensure your ADU is a sure bet.
Step 1: Financing
Homeowners looking to build an ADU have a few options for how to fund their new addition. Cash is always an option, but even if you have a nest egg set aside, it may make better long term financial sense to access that equity that’s been building in your home these last few years.
According to the Richter Group at Keller Williams (many thanks to them for allowing us to share their expertise with you!), here are six quick tips on how to shop for and manage a home equity line of credit or HELOC.
1. Shop around. Comparison shop to get the best rate.
2. Ask about the margin. If you're offered a rate that's lower than the competition, it's probably just an introductory rate, so ask about the lender's margin. For example, if the introductory rate is 3.5 percent and your lender's margin is 2 percent, your final interest rate will be 5.5 percent.
3. Consider a conversion clause. Some HELOCs allow you to convert a variable interest rate to a fixed rate, usually during the draw period (5-10 years).
4. Watch out for balloon payments. Balloon payments mean that you must pay the balance in full when the draw period is up. Do not choose this option unless you have the financial means to handle it.
5. Create a family plan. Decide what the money will be used for and who will handle the funds. Keep in mind, you can lose your home if the HELOC is not handled properly. Create a payback plan. Come up with a reasonable plan for how the loan will be paid back.
Step 2: Zoning
If you’ve ever investigated your city or town’s rules about what you may or may not build, how you should build it, and whether you need a permit, you know that government websites can sometimes be difficult to navigate, and that code language is, at best, opaque. This is further complicated by the fact that every town organizes their website and the information found therein somewhat… shall we say… uniquely? Yes, let’s say that.
1. Find your town’s website. This is, arguably the easiest step. If you are an avid googler, this next statement will come across as elementary, but for the folks who are still trying to figure out how the cats get through the Internet tubes, here is our foolproof search term algorithm. Google [town or city] of [name of town], [state], website. For example, “City of Portland, ME, website.” The first result will almost always be the one you want.
2. Find the Planning and Development Department section of the website. Typically, there will be a link or drop-down menu called “Departments.” You will be looking for a department called Planning and Development, Code Enforcement, or Building and Zoning. There is no standardized term that every town will use, but the department you want has some combination of these words.
3. Identify the appropriate files. Once you have found the appropriate department, you will be looking for these key words: CEO or Code Enforcement Officer, Zoning Map, Codes, Ordinances, Design Standards, Charter. You may need to click on a few of these to find what you need, but you are trying to find contact information for the Code Enforcement Officer, a map that indicates what building or planning zone in which your home is located, and the comprehensive development plan that will describe what types of buildings are permitted in each zone, as well as the rules that govern how they are built.
If you want, you can stop here. You have the CEO’s contact information, and you can write or call them with your questions. This can sometimes be the easiest (and quickest!) way to get the answers you’ll need. If you’d feel better about coming into that conversation with a bit more context on the town requirements, read on!
4. Find your property on the zoning map. This can be very easy or very hard, depending on your town’s participation in the 21st century. You may find that your zoning map is a PDF file, or a number of PDF files, with bright blocks of color and no street names. If this is the case, Google Maps is your friend, and rivers, railway tracks, and major transportation routes will provide the patterns you need to locate your plot. Alternatively, you may find that your town has provided you with an interactive online map that you can search by address and select the layers of information you want to see. If this is you, do a fist pump, whisper “yesssssss” and select “zones” for the map overlay. Take note of your zone and its abbreviation.
5. Track down that elusive ordinance file. Locating the correct zoning ordinance file is arguably the most difficult, but you can do it. It will be called “Zoning” or “Ordinance” or “Charter,” and unless you live in a very small town, it will be at least a hundred pages long (Portland’s is 944 pages long). If you’ve opened a file and you’re not sure if it’s the right one, check out the table of contents. There should be references to different zones or districts both residential and commercial, wetland or open space preservation, building permits, and definitions. At the top should be the date the ordinance was adopted or amended– make sure it’s within the last few years. If you value your sanity, don’t try to read it.
6. Find the Definitions. Usually they’re at the beginning, but sometimes at the end, and they are arguably the easiest part of the document to comprehend. In this case, your goal is to find out whether your town has made provisions for accessory dwelling units in the code, and if so, what term the town is using to discuss them. Alternative terms are “accessory apartment” or “efficiency unit”, and it’s very possible that your town has found some other word to describe it. Your task is to learn what terminology will help you find the rules that govern building an ADU.
7. Locate your search term in the document. If you are using a Mac, hit Command + F. On a Windows machine, Ctrl + F. A little search window will pop up at the top of your screen. Type in the term your town uses for Accessory Dwelling Units. That little window is your gateway. As you click the little down arrow, it will bring you to each mention of your search term, highlighted, so you can read what it has to say about your term. You will find that unrelated instances of the word pop up, or that there are several sections that seem to contradict each other regarding your search term. Simply scroll far enough through to get some context – you will probably find that it describes your term for each zoning district. Ignore the ones that aren’t your zone. They have nothing to say to you and their opinions don’t matter. Takes notes on your understanding of the rules as they pertain to ADU’s in your zone, then move on to the next step.
8. Verify your findings with your local expert. Go back to the department landing page and find the CEO’s contact information. Write a polite email describing what zone you’re in, what you want to build, and your understanding of what you have found in the building code. Ask them to confirm your interpretation, and guide you to any documents, amendments, or specific portions of the code that might provide further clarity.
Step 3: Site
So now you know you can finance an ADU and that it’s legal on your site (nice work!). Just a few considerations remain in assessing whether your property is a good fit (literally!) for an ADU.
1. Accessibility. The site designated for the ADU will need to be accessible from the main driveway or road, with roughly 50’ of clearance to one side of the ADU site. This will allow for delivery and installation of the module.
2. Clearance. The access path to the site (including driveway and roads) will need to provide a minimum of 18’ clear between trees, fences, gateposts, and other obstacles. There will also need to be 14’ of overhead clearance to any tree branches, electrical lines, or other obstructions.
3. Setbacks. Setbacks are restrictions about how close to the edge of your property lines building is allowed. Be especially cautious on lots that have natural features such as wetlands. The views might be beautiful, but in order to protect fragile ecosystems, municipalities often have extensive setbacks in place. This can severely limit the size, placement, and potential footprint of structures on the property, including ADUs.
Step 4: Utilities
Yup, since you already have a house on the property, you already have utilities. This is a huge advantage over development of a brand new site. These existing utilities may easily absorb the additional living space, or they might not. Knowing this in advance will help inform the projected costs for the project.
1. Public Utilities. If your home is connected to public utilities, city planning officials will likely be checking to determine if your ADU can be supported by your existing connections. These things can include the number of additional bedrooms, the distance from the utilities to the ADU, and the amount of power your electrical panel can support. While existing services to a typical single-family home are usually sufficient to support an ADU, in the event that they are not, your ADU designer and builder will work with you to upgrade the necessary service.
2. Septic. If your home is on a septic system, it will be important to verify that the current system is sized for the addition of the ADU. It may be that either expansion of the existing system or installation of a separate system is needed, in which case you will need to plan for the additional cost associated.
3. Well Water Systems. With this type of system, make sure to check that the flow rate and water pump can sustain the additional usage of an ADU.
Now that you’ve figured out the viability of an ADU on your property, here comes the fun part: picking out the ADU design that appeals to you most! Whether it’s a granny-flat, a short term rental unit, or a backyard office, BrightBuilt offers a wide variety of ADU designs to best suit your needs. If you are interested in more information about our new ADU, the Sterling, head over to the informational page by clicking below!