How I built an ADU

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Real Estate

Have you considered building an ADU, guest house or in-law quarters? After researching accessory dwelling units in my area (San Jose, CA) and deciding to have one built, I tracked the entire process and cost to build an ADU.


I saw this as a good investment opportunity. The Bay Area has lad a lack of available housing for quite some time. This has really driven up property values and rents. While the rents you can get are high, the expense of buying a property can make it difficult to invest here. Other areas are more affordable, but don't demand the same rents as the Bay Area.

I know areas where friends/clients have bought and have positive cashflow (Columbus, OH, El Paso, TX) but then you better trust your property manager when you can’t often check on the property yourself.

Cities are making it easier to build because of the need for affordable housing in the Bay Area (or just housing of any kind). They have relaxed setback requirements and made same-day permit approval possible.


I first spoke to a friend and colleague who had built an ADU with GoldBar Builders and he was very happy with the result. I saw what he had built, liked the quality and layout, and thought it would fit well on my lot. When the time came, I did a site walk with Greg Popovich, the owner of Goldbar Builders. We discussed size, using the existing structure (I had a finished detached garage in back), or building new.

After discussing what was involved, I understood that building new was definitely the best way to go. Up front, Greg explained that the construction process was fairly quick. The holdup would be with the planning and building departments.

Here are the dates for each important stage in the process:

Sept, 2021. Signed the contract and paid deposit
Nov 2021. Plans and initial permits and city review, waiting in queue
Feb 2022. Approval of plans and waiting to start
March 12, 2022. Garage demo’d
March 22, foundation area dug and trenched for plumbing/electrical
March 31, foundation poured and framing going up April, plumbing and electrical
May 6, drywall Mid June, stucco done, interior nearly complete (cabinets, counter tops, bathroom fixtures, shower,
Aug 8, made final payment, final approval waiting on solar
Sept, solar installed and officially turned on 10/11/22 with all permits finaled


The construction itself lasted less than 5 months. The total process, start to finish, was 13 months, but it would have been 10 months if I had gotten the solar done sooner. Both Goldbar builders and SunPower solar did great work and communicated well.


The total cost to build, including plans, permits, materials, labor and solar was $253,562. The 2.55kW solar panel system was just under $11,000 and allowed for a 26% credit toward income taxes for installing.


Knowing the cost would be around $250k, we considered the best way to pay for the project. My first thought was a HELOC (home equity line of credit), since we had a lot of equity in our home.

I also considered a construction loan. But a lender I use often recommended a cash-out refinance. We refinanced from 4.25% to 2.75% for a 30 year fixed mortgage, and pulled $185k out to mostly finance the project. This allowed us to keep our monthly mortgage payments low, and still leverage the equity in our home for an investment opportunity.

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Michael Majchrowicz Coldwell Banker Realty
@michaelmrealestate IG, FB, TikTok,