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What is a Granny Flat?

By: Aida Garcia Published on: October 31, 2019 Category: Testing

Granny flats: “You can’t beat the price”

Board of Supervisors Chair Dianne Jacob knows a deal when she sees it. She announced San Diego County’s offer to homeowners: get a floor plan for a granny flat, 600 or 1,200 square feet in size, permit-ready, for free.

She said that the county would offer other floor plans in the coming weeks.

That’s not all the county is doing to entice owners to build granny flats. It has waived $15,000 in permit and development fees. Together, this adds up to a saving of $30,000 for each new structure. The Supervisor said. “We’ve cut $30,000 off the price of each house.”

She’s referring to small apartments that go by several names: granny flats, in-law suites, companion units, studio apartments, casitas or, in legal terms, Accessory Dwelling Unit, “ADU” for short.

They have a living space for one or two people, a kitchen and bathroom and a separate entrance.

They can be attached, like converting a basement or garage or extending the main house, or they can be a detached structure.

Granny flats offer homeowners short- and long-term benefits, depending on how they are used.

They can provide additional income and increase the home’s property value. And, if they are built to house a family member, such as an adult son or daughter, they can strengthen families and potentially help homeowners as they age.

Public officials see these granny flats as an affordable, relatively rapid solution to California’s housing shortage, whose consequences are far-reaching.

Experts, however, caution that homeowners need to educate themselves about these granny flats and understand their own situation and long-term goals before deciding to build one.

Granny flats: An affordable housing solution

Granny flats are well suited for seniors, veterans, college students and other residents with limited incomes, individuals who can’t afford the region’s astronomically high rents but can pay modest ones.

Adult children of homeowners can live in these granny flats, potentially avoiding a move to a distant town or even out of state to afford housing.

The granny flats can house caregivers, allowing aging homeowners to stay in their residence as long as possible rather than having to move to expensive assisted living quarters. In fact, the caregivers can be adult children or other family members committed to the health and safety of the aging loved one.

San Diego County dedicates an entire department to “aging in place” to help seniors live longer and better at home and to reduce healthcare and housing costs. Granny flats are a good option for to do this.

Actual rents for granny flats differ according to their size and location. One of the larger building companies in San Diego estimates that a 500-square-foot flat would rent for around $1,600 per month.

Granny flats give baby boomers a way to make income home. This is significant since the average 65-year-old couple has only about on $100,000 in savings for retirement, according to the U.S. Census Bureau.

New rules make easier to build an ADU

San Diego County’s offer for free floor plans for granny flats is part of a broader government effort that started a few years ago to respond to the severe shortage of affordable housing.

Starting in 2016, the Legislature in California passed laws that made it easier and more

affordable to build granny flats on single-family and multifamily zones. These offer more affordable housing within existing neighborhoods rather than build on open land, often in the suburbs, a process that can take years to complete and brings problems of its own. In fact, the state government has a department that educates homeowners about the benefits of building an ADU and to helps them to do it.

In May of 2018, the San Diego City Council cut fees by as much as 50 percent to build granny flats to encourage homeowners to take that step. Depending on the location and other factors, the fees ranged from $30,000 to $49,000 per unit before the Council’s decision.

“With these new incentives, we’re removing barriers to encourage the construction of the new units that San Diegans can actually afford,” Mayor Kevin Faulconer said at the time.

The city has around 236,000 single-family detached homes, and a survey indicated that between 2,000 to 6,000 granny flats could be built in the next decade.

This year, the City of San Diego issued a “Companion Unit Handbook” as a way to encourage homeowners to build more granny flats to provide affordable housing. The 42-page handbook covers such topics as zoning laws and parking requirements and explains how a subsidy program the city has established works.

Costs vary to build granny flats

The cost to build a granny flat can vary widely depending on the size, the structural form, the city, the builder and, of course, the financing option used. Though it seems contradictory, the larger the ADU, the cheaper the cost per square foot. The cheapest option is to convert a garage into a granny flat.

Homeowners need to consider carefully the reason they want to build one, how much it’s going to cost them and how much rent they can realistically charge. They also have to evaluate their own lifestyle and goals to understand if the investment makes sense for them.

They can use the tens of thousands of dollars they have built up in the equity on their home to obtain a home improvement loan to build the granny flat. The rent they charge can pay for the financing and for other uses, such as retiring debt, building their retirement fund or for vacations.

For example, the site Maxable estimates that a 435 square foot granny flat in the North Park neighborhood of San Diego would cost $130,000 to build, adding significant equity to the property. Rents for a one-bedroom apartment in that area can run as high as $1,800 per month, the site said.

Granny flats are a win-win

Granny flats offer a win for homeowners who want to invest in their families, their property and their future.

And granny flats are a win for the state and cities, which are under pressure to ease the severe shortage of affordable housing, at a cost-effective price. That’s why they are making it as easy as possible to build them.

Homeowners are paying attention.

In the city of San Diego alone, homeowners took out 20 permits to build an ADU in 2016. By 2018, that number had soared to 213. That’s an increase of nearly 1,000 percent. It all begins with smart homeowners turning to a source they trust with their house, Multitaskr, to find out if this hot opportunity is right for them.

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