Globella Buyers Realty > Resources > Cost to Build Granny Flat in San Diego

Building a Granny Flat in San Diego: How Much It Costs and What You Should Know

How Much Does it Cost to Build a Granny Flat in San Diego?  Photo Credit: Allan Ferguson

 

Recently, I wrote a piece covering California’s new granny flat laws and what they might mean for homeowners and renters in San Diego.


Today, I’m going to turn to the practicalities of building or converting a granny flat, including how much it can cost AND how much you can recoup in rent.


The new California laws regarding granny flats, or Accessory Dwelling Units (ADUs), drastically reduced state fees for water and sewer hook-ups and permitting.This means that the cost of building a granny flat in California went down by tens of thousands of dollars!

 

FAQ: How Much Does it Cost to Build a Granny Flat or ADU in San Diego?


While building a granny flat costs much less than building a single-family home, it is still an expensive prospect. In a recent survey by the UC Berkeley Terner Center for Housing Innovation, granny flat owners reported spending, on average, $156,000 to build their ADUs.


Converting an existing structure, like a garage or a carriage house, into a granny flat will clearly cost less than starting from scratch. However, even a garage conversion could cost $30,000 or more.


In addition, a lot of urban areas in California (including throughout San Diego), charge development fees designed to mitigate the impact of new construction on the existing neighborhood. Homeowners still need to research the fee structure in their area and factor that into their costs.

 

FAQ: How Can I Get a Loan to Build a Granny Flat in San Diego?


The market for granny flats is still new in California, and many cities are still working out their own ADU ordinances and regulations. As a result, homeowners may have some trouble getting a traditional loan for the project.


Several innovative alternatives have been suggested. For example, ADU Builder in Palo Alto has created a profit-sharing model, in which the builder helps cover construction costs in return for a certain percentage of the profit from the rental of the new unit. Another Palo Alto company, Point, gives homeowners money toward the construction of a new granny flat in return for a percentage of the appreciation of the entire property; in this model, homeowners have 10 years to either sell the property or buyout Point’s share.


You may be able to get a Home Equity Line of Credit (HELOC) to finance the building of your ADU, or you may be able to refinance your current mortgage and get cash out.  


Building a granny flat on your property still involves a big investment and a lot of decisions, even with the new laws making it easier. So how do you know if it's worth it for you to build an ADU on your property?

FAQ: Is it Worth it to Build a Granny Flat in San Diego?


First
, really think about your long-term strategy.


Are you planning to sell your house in the relatively near future and want to maximize its value? Are you planning to stay in your current home and plan to use rental income to help pay your mortgage? Understanding your long-term plan is key in any real estate decision, including whether or not to build a granny flat.


Second
, do your research.


Home values and rental prices both vary considerably in different areas of San Diego, so it’s important to know the trends in your area. Having a granny flat can raise the value of your entire property, meaning a bigger profit when you sell. If that’s your goal, make sure to look into how much comparable homes with granny flats or rental units have sold for in your area. That will give you a better idea of just how much value such a unit might add to your property.


If you’re thinking of a granny flat as a source of long-term income - in other words, as a rental property - look into how much rents typically are in your area. According to RentJungle, as of May 2019, the average rental price in San Diego County hovered around $2,200. Average rent for a one-bedroom unit is around $1900, while the average rent for a two-bedroom unit is around $2400.


However, these numbers can vary considerably from neighborhood to neighborhood. For example, rent in La Jolla is among the most expensive, ranging anywhere from $1900 to $3000+ for a one-bedroom unit. Rent in Golden Hill or Normal Heights, on the other hand, ranges from around $1200 to $1800+ for a one-bedroom unit.


Knowing how much you can realistically charge in rent is a key piece of information when you’re deciding whether or not building a granny flat is the right financial decision for you.

Also Read: 3 Strategies & Tips for Buying an Investment Property in San Diego

Also Read: All About the New (2017) California Granny Flat Law


---------------------------------------------------------

Justin Gramm is the founder and principal broker of Globella Buyers Realty, your San Diego Exclusive Buyer Brokerage.

Exclusive Buyer Agents do not list homes for sale and never represent sellers. They have no "inventory" to try to sell you. They can represent you in purchasing any home. They are specialists at representing buyers only on the buyers' side of the transaction. Exclusive Buyer Agents work to get buyers the best price and terms when they buy a home.

If you have excellent credit and plan to buy a home or condo in San Diego County within 90 days, contact Justin Gramm to hire an agent on your side of the transaction. Call Justin at (858) 437-2662 or E-mail.

Justin Gramm, Broker
Globella Buyers Realty
Ph: 858.437.2662Fax:858-228-9801
CA 92115 US
 CA BRE# 01714813
www.Globella.com
What is an EBA? When to Hire an Agent Buying a Home in 2020 How My Schedule Works Buyer Strategy Session How I Work When to Buy? Part 1 Globella Questionnaire About Globella Why Hire Justin? Buyer Representation How I Get Paid Helpful Buyer Links Location = Lifestyle Buyer's To-Do List Relocating to San Diego About Justin Gramm VIDEO: Meet Justin First-Time Homebuyers 10 Best School Districts How to Write an Offer Paperwork North Cty vs. San Diego What is Dual Agency? New Construction Testimonials/Reviews Retiring in San Diego About Buyer Agency The Informed Buyer Dog-Friendly Buildings Paperwork Explained Home Buying FAQ Help for Luxury Buyers 3 Investing Strategies The Dual Agent Trap Buying a Condo 5 Reasons to Rent Buying Foreclosures 1031 Exchange Tips The Globella Difference Accredited Agent (ABR) Avoid Moving Twice 5 Reasons to Buy Agency 101 Preapproval Questions Agency Disclosure Negotiation Expert Privacy Policy Second Home Expert Agent Ethics Choosing a Lender Buyer Agent Interview Foreclosures Buying a New Home Hiring an Inspector Negotiating Your Loan Top 1% of Realtors Buyer Services Avoiding Wire Fraud Termites! Get a Home Warranty Hot vs. Cold Market Hazard Insurance Tips Checking HOA Health Earthquake Insurance Condo Litigation SD Weather Tips Property Taxes Cost of Granny Flat Vesting as LLC or Trust Buying with a VA Loan Investor Services Buyer Resources Code of Ethics About the Name Contractor List Moving Checklist The Grande: Downtown Condos Seven on Kettner Treo Beech Tower Citymark at Cortez Hill Park View Gaslamp City Square Watermark 235 on Market Atria Brickyard Columbia Place Harbor Club Island Lofts Angove Lofts Jacaranda Studios Rowhomes on F Bella Via Columbia & Fir Lofts Date Street Townhomes Ecco Lofts Finestra Lofts Hawthorn Place Kettner Rowhomes Lusso Lofts The State The Waterfront Victorian House Aperture Preparing a Short Sale Offer How A Short Sale Lender Analyzes an Offer Short Sale Lenders Approval Options Different Short Sale Lenders Act Differently Loss Mitigation vs. Foreclosure Departments Short Sale Defined The Ideal Short Sale Seller Why Do Banks Even Consider Short Sales? Some Listed Short Sales Are Not Closeable La Jolla Del Mar Point Loma Rancho Santa Fe Pacific Beach Coronado Downtown San Diego Contact Us Communities Buying Short Sales FAQ International Buyers Luxury Buyers First-Time Buyers Vacation-Home Buyers Move-Up Buyers Downsizing Buyers 1031 Exchange Buyers Luxury San Diego Real Estate Fair Housing Investment Buyers San Diego Photos New-Home Buyers Testimonial Chuck Smith Testimonial Downtown Steve What's Exciting! How We Work Short Sale Testimonial Investing Buying a Home Footer Links Local Restaurant Reviews SD Restaurant Reviews Things to Do in SD SD Eatery Reviews Paperwork How We Work About Our Name How We Get Paid Before Writing Offer Before You Write an Offer Before Writing an Offer Del Mar Buyers Agent 92101 Buyers Agent Loan Doc Signing Tips Testimonial - Samantha Z. How I Work Review from Melanie & Michael Review from Erica M. Buying in 2014 Spring Home and Garden Show 2014 at Del Mar Fairgrounds Review from Daniel E. Review from Steve and Chi Buying in 2015 Spring-Home-Garden-Show-San-Diego-Del-Mar-Fairgrounds Buying a Home in 2016 Review from Michael I. Review from John and Wendy Review from Allison H. Review from Frank S. Broken-Landing-Page San-Diego-Spring-Home-and-Garden-Show-2016 Your Ivy at Carmel Valley Exclusive Buyer's Agent Your Sea Cliff Exclusive Buyers Agent Your Avery Pointe at Veridian Exclusive Buyer's Agent Your Lanai in Carlsbad Exclusive Buyer's Agent Your Pacific Gate San Diego Exclusive Buyers Agent Your SummerHouse Carlsbad Exclusive Buyers Agent 2016 San Diego Market Your-Park-at-Bankers-Hill-Exclusive-Buyers-Agent Your Aura Exclusive Buyers Agent San Diego Buyer Agent Review from Mary R. San Diego Buyer Agent Review from Dan B. Your Estates at Del Sur Exclusive Buyers Agent San Diego Buyer Agent Review from Ken and Cindy Three Reasons to Buy a Home in Hillcrest, San Diego Three Reasons to Buy in Bankers Hill San Diego Your Elms at Carmel Valley Exclusive Buyers Agent When to Buy? Part 2 San Diego Buyers Agent Review from Kevin C. Three Reasons to Buy in Encinitas San Diego San Diego Buyer Agent Review from Natacha S. Is Fall a Good Time to Buy a New Home? Your Elms at Carmel Valley Exclusive Buyers Agent Your Canterra Exclusive Buyers Agent Three Reasons to Live in Normal Heights, San Diego San Diego Buyer Agent Review from Renaud P. Buying a Home in 2018 Your Estancia at Cielo Exclusive Buyers Agent Your Upper Cielo Exclusive Buyers Agent Three Reasons to Buy a Home in La Mesa Your-Cottages-at-St-Cloud-Exclusive-Buyers-Agent Your Harmony Grove Exclusive Buyer Agent Three Reasons to Live in Kensington, San Diego 8 Home Maintenance Tips for Spring Federal Interest Rate Hike and San Diego Homebuyers Review from Stewart H. Review from Roland M. Review from Duane and Nancy Review from Natacha S. Review from Shandi and Michael Your Savina Exclusive Buyers Agent Your Escaya Exclusive Buyers Agent Your Terraces at Robinson Ranch Exclusive Buyers Agent Your Signature Exclusive Buyers Agent Your Garrison Landing Exclusive Buyers Agent Review-from-Joseph-C Review from Kara S. Review from Martin and Jackie 2018 Market Update Three Reasons to Live in South Park San Diego Review-from-Adam-W. New Granny Flat Law in San Diego Why Buy at Civita Review- from-Randy-F. Review-from-Oline-C Buyer's Privacy Rights Review from Alex M. Three Reasons to Live in Tierrasanta Review from Greg C. Review from Kenjie S. Review from L.T. Review from Mike L. Sandicor Statistics Videos Market Statistics Request a Buyer Strategy Session / Interview VIP Home Finder Home Investigation Tips Free Buyer Reports Free Investor Reports Welcome Subscribe Site Map