Brenda Vingiello, Sand Hill’s Chief Investment Officer, joined Squawk Box to discuss her thoughts on the latest market trends and market outlook for 2025. This
Accessory Dwelling Units – A Quick Guide
Published Date : July 20, 2023
July 20, 2023
There are countless reasons for building an Accessory Dwelling Unit (ADU) on your existing property. Defined as a self-contained residential unit located on the same lot as an existing single-family home, these units can be ideal for many scenarios. From creating a separate space for loved ones or a live-in nanny, accommodating our new work-from-home philosophy, to supplementing income through rent, ADUs can be a real lifestyle benefit. It is also a great way to expand your living space without the inconvenience of home construction. While the possibilities seem endless, it is critical to do your research before proceeding.
Start by understanding local laws and regulations. Is your lot even eligible to expand the footprint in accordance with local zoning restrictions and building codes? This is crucial because if it is unlawful, the appraiser may not assign it any value and you will be unable to gain access to lenders. After that is determined, make a list of all other considerations. As an example, do you need to install a sprinkler to meet fire regulations? Do you need to provide off-street parking? Can you tap into existing utility connections?
All of these considerations add up financially, so do the math! As an example, will you be able to comfortably cover the potential increase in ongoing expenses such as additional mortgage and insurance payments, and property tax associated with the structure? What are the one-time costs such as permit fees and utility hookups?
Should you choose to rent out the unit, are you reliant on rental income to cover these costs? Have you researched rental rates in your area to understand your cash flow? Now that you have calculated a good estimate of your overall costs, are you able to use existing assets to finance the project or can you easily obtain financing?
One of the main benefits to building an ADU is its versatility. What may start out as a rental property or additional guest space, could eventually become an ideal home for your aging parents or that art studio or home gym you always wanted in retirement. But the main goal should be determining if the unit will add value to your balance sheet. When it is time to sell your home, having this additional structure may bring additional buyers into the pool who are looking for rental income to supplement mortgage payments.
For so many of us, our primary residence is a significant part of our overall net worth, so you want to ensure that using resources to build the ADU makes the most financial sense for your particular situation. Be sure to contact your Sand Hill Wealth Manager to guide you through the process.
Articles and Commentary
Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.
Video Presentations
All video presentations discuss certain investment products and/or securities and are being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect Sand Hill Global Advisor’s (“SHGA”) or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. Any comments, opinions, or recommendations made by any host or other guest not affiliated with SHGA in this video do not necessarily reflect the views of SHGA, and non-SHGA persons appearing in this video do not fall under the supervisory purview of SHGA. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.
Recent Posts
