If you’re interested in tiny homes, it’s important to know your options. Living small comes in all shapes and sizes. Many people are introduced to tiny living via a romantic dream of traveling the country in a tiny home on wheels. But, this dream has certain requirements. Having the ability to work from anywhere is typically the top determining factor for a traveling lifestyle. Not to mention a smaller space made with weight-conscious materials. But if you’re anything like us, you might have a normal 9-5 job that ties you to a location. Or you want to stay close to family. Or whatever valid reason you have for wanting to stay put AND to enjoy a simpler, smaller home. Being on the road isn’t for everyone, and it’s important to highlight the stationary option of tiny living for the majority of people.

What’s an Accessory Dwelling Unit?

Here’s where ADUs come into play. What’s that you ask? Ever heard of a mother-in-law suite? That’s a great example of an accessory dwelling unit (ADU). This is a term used to describe a secondary structure on a single residential plot of land. Important to note here is that the structure in question is used in addition to a functioning single-family housing structure. In the modern USA, ADU housing typically looks like a smaller home on the same plot of land as a larger home, a finished basement or addition, or a converted shed. This type of structure is not new, but as first time home buyers explore their options, this term is gaining popularity. In cities like Austin, TX, and Portland, OR, there has been a significant increase in ADU permitting requests. In January of this year, the state of California put in effect bills allowing Californians to build additional structures and convert garages into ADU housing.

Why does this matter?

There are many benefits to accessory dwelling units as tiny houses. In terms of carbon footprint, living small reduces the effect we have on the environment. The efficient use of land is important for our growing population. There are also financial benefits to accessory dwelling units as tiny houses. Think rentals, providing housing for extended family, and a more affordable option for living. Housing needs are increasing, and accessory dwelling units are an environmentally friendly, financially sound solution just like tiny houses on wheels.

ADU units are the original gangster tiny homes, and are now legal in some states.

Accessory Dwelling Unit Designs

To explore this idea, I’ve looked to California, as they are one of the states leading the charge in modernizing ADU laws to address population needs. They have a similar model that can resemble Oregon who has been pushing this idea for quite a while now. While Vancouver is light years ahead of the US on these laws Accessory dwelling units come in many forms. These structures are typically 1000 square feet or less. They can be stand-alone structures like tiny homes on foundations, and are therefore customizable. ADUs in California can now be attached units or even garages that are attached to the main dwelling unit and may or may not be fully equipped with bathroom and kitchen features. Another option is an attic/basement apartment, or even dividing a large home into smaller units. Really, there are a ton of options here as these can be the same quality of a larger home on a smaller scale. They can also be pre-fabricated or DIY (Fonzie and Richie lived in an ADU unit!).

Accessory Dwelling Unit Design image taken from Housable.com

ADU Rental

Accessory dwelling units are a great opportunity for extra income via tiny home rental. Being able to rent the ADU home out to a family, friend, or even on the open market allows you to have more money in your pocket for investments. With the hype around the tiny house movement, this is an excellent opportunity to create short or long term tiny house rentals. In our area of Florida, if you were to rent out a tiny house for $200 a night and met the average occupancy rate, you’d have an extra $2500 a month in your pocket! That would pay the mortgage on the larger home on the property. Fingers crossed that other states start catching on to this trend. Update those ADU laws!

Housable.com offers an easy ballpark estimation calculator for accessory dwelling unit construction cost, appraising properties with accessory dwelling units, but also projection as a long term ADU rental based on that location. This tool is extremely useful to get an idea of some cost to help properly put a business plan together for a tiny house rental unit.

Housable ADU or Accessory Dwelling Unit Rental cost

ADU Construction // ADU Permits

If you read this article, you know that navigating permitting isn’t impossible —but it is a lot of work. This is also true of ADU homes. Building these structures requires specific permitting from the city and/or county. In our own work building a tiny home on foundation, we found the county friendly and helpful, but we did a LOT of digging to get all of the information needed during the process. As California adjusts to the new market of ADUs, Housable.com eliminates the heavy lifting of this task with their permitting and blueprint service. California residents can look up their property, find out exactly what the requirements are for their structure, and what permits are needed for that plot of land with Housable. They can also design a custom home, and get the blueprints for construction, ready to submit. Crazy. The following list is what is included in their plans. This is a good list of items to have for any zoning department as we did this for our tiny house on foundation.

A 0.0 - Cover Sheet
A 1.0 - Site plan and vicinity map.
A 2.0 - Architectural plans including floor plans, sections, elevations
A 3.0 - Construction spec, assemblies
A 4.0 - Architectural schedules
A 5.0-7.0 - Mechanical, electrical, plumbing plans
A 8.0 - Certificate of Title 24 energy compliance
S 1.0-2.0 - Structural plans and details

The information about county requirements for your property is especially nice for budgeting for your tiny house. In our experience, this was the hardest part of building a tiny home on Shellmate Island. The costs associated with county requirements impacted our initial budget estimate. This included things like a height requirement (for flooding), impact-rated windows for hurricanes, and minimum/maximum square foot requirements. This is crucial information at the beginning stages of planning as the hidden costs can really bite you later (triple the cost for the windows, in our case!).

Accessory Dwelling Unit Financing

Many people ask us how to finance a tiny house. Well with ADU housing, financing is a bit easier and more straight forward.

Home Equity Loans & HELOCS for ADU Tiny HousesThis is the most common route for ADU tiny home financing and can be broken down into two main types.
- Home Equity Loans, which provide a fixed amount of cash available to you with a fixed repayment schedule, and are backed by the equity you own in your bigger home on the property.
- Home Equity Line of Credit (HELOCS) which are also backed by the equity in your dwelling home, but are organized as revolving lines of credit that have shorter repayment terms and only charge interest on the balance you have drawn on the line.
Cash-Out Refinancing
- In this situation, you would refinance the already existing loan on your home and change your mortgage provider. This would consolidate the new project financing with the old mortgage, and allow you to get a better overall rate.
- This is option is great as an ADU tiny house loan because lenders know that the additional unit will provide tiny house rental income, increase the overall current property value, and make it easier for you to repay the mortgage. It’s a win-win for both parties!

Accessory Dwelling Units in California

Californians are popping the bubbly! The State of California recently passed new laws (AB-68 and SB-13) which lays out local zoning codes for Accessory Dwelling Units (ADUs) statewide, a huge win for the tiny house community! As of January 2020, single-family and multi-family properties are allowed to add one ADU and one Junior ADU (the same concept, but 500 square feet or less).

This is huge news for California. This is a great example of state legislature seeing the people’s need, and addressing that need with laws that support a solution for the tiny house movement! It looks like the well-known stereotype about California’s costing of living will soon change for the better!

Housable

Houseable is a great resource for your ADU construction and research. They are currently focusing on ADU housing in California. California residents can use the local contractor database service to get on-site visits and cost estimates to compare services for their ADU housing. This is extremely useful as they have strategically partnered up with local contractors that they trust. With the construction of Shellmate Island, we know how important that can be with the type of workforce out there. This will save you hours of calls and possibly money down the road.

Speaking of saving money, Housable.com’s ADU Design Permit-Ready service can save you more than a few bucks in the building process! Getting your designs ready for city permitting and construction can speed up your ADU tiny house build and reduce unforeseen costs later on in the process. This is another great offer that will save you money in your ADU tiny house build. I can’t tell you how many “change orders” we had with our tiny house on foundation! Having a well thought out design that is ready to hand in to the permit department is a huge bonus. If you stick to that plan you will save money on your tiny house.

Between feasibility, design, and permitting services, you can get everything you need to build your ADU tiny house in California with Housable.

Hopefully, this trend catches on and more states will have services like the ones laid out here for CA residents. Living small presents so many benefits! You can reduce your carbon footprint by consuming less, and sharing the land. These are responsible actions that address the growing population’s needs and present benefits for renters and homeowners alike. The future is tiny, friends!

-Tim & Sam

Why ADUs are the Future of the Tiny House Movement