Potential for Tiny Houses and ADUs

This post is to share my exploration of the potential for Tiny Houses and other Accessory Dwelling Units (ADUs) in the San Francisco Bay Area in particular. Zoning and planning laws, of course, vary according to local views and needs, and some areas are updating their fees and laws to accommodate increased demand and density. To start, this newsletter will look at the larger picture and my intention is to focus on opportunities as we move forward. Your feedback is invited, as there are so many interesting things happening now.

The state of California has mandat4ed taht applications for ADUs be handled in a timely manner.  As building departments become more aware of smaller structures and the new increased interest in them, they are also becoming more familiar with which units can be more quickly pre-approved as they know what housing products used for back yard structures already meet or exceed building codes.

You already have the property and the insurance in place but likely need to upgrade insurance. Property tax also needs to be figured in.  Rents $2400-$2700 for a 1 bedroom not at all uncommon depending of course on location.  The estimated rent ratio is pretty close to an old-fashioned 1% and could be higher if the unit were 2 bedrooms. This means that Mom & Pop can stay in their home and be better positoned to keep up with inflation.  Or sometimes Mom & Pop move into the ADU and let the kids have the main house, which is so much nicer than having them move too far away becasue of housing costs!  It will be great to have more options in housing for our teachers, and in San Jose there is a new program to streamline the application process to build and also lower fees for those who will rent at affordable prices.

These numbers are quite variable, of course. There is a guy in Oakland who bought a used shipping container for $2000 and rehabbed it, total cost to him about $15,000 and he rents it out in the industrial part of Oakland for $1000/ month and he has a second one that he rents on AirBnb part time and uses for a conference room part time. They are functional not fancy. He uses a phone ap to run the lighting & video system. He is quite pleased w/ his ROI.