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There’s a lot of potential in expanding your home’s livable space. Spare bedrooms, rental opportunities, and more – it’s no wonder many mobile homeowners dream about building new rooms and making other additions to their properties.
However, it is not necessary to demolish walls or expand your personal house to unlock these exciting possibilities. Accessory dwelling units, or "ADUs," are stylish, potentially profitable additions you can make to your home under certain circumstances. In this article, we will explore what ADUs are, the different types of ADUs, and how you can secure financing for the best ADU for your property.
An accessory dwelling unit is a secondary living space located alongside a primary residence. For example, imagine that you have a shed next to your mobile home that's on the same land parcel as your primary property. If you turn that shed into a livable place, it could qualify as an ADU.
Some other examples of ADUs include:From a legal standpoint, an ADU is part of a bigger piece of real estate that contains a primary house. Because of this, you can’t purchase or sell an ADU home separately – instead, any ADUs on a primary property, including mobile or manufactured real estate, are bought and sold as part of the overall property package.
The biggest difference between an ADU and regular real estate is whether the property in question is “primary.”
Imagine a normal manufactured house on a plot of land. The house is the primary property. An ADU built onto the same parcel of land, like a guest house or garage converted into a spare room, is a secondary property.
The primary property is larger than the ADU, usually has more connected appliances and accessories (at least at first), and is the property on the deed for the home.
As you think about whether you should add an ADU to your home, keep in mind that there are several different types of accessory dwelling units you can construct. These types of ADUs have different implications for property value, property taxes, and more.
The major kinds of ADUs include:There are lots of great reasons to think about adding ADU housing to your mobile or manufactured home! These home renovation projects are very popular among single-family homeowners for reasons like:
ADU housing is a fantastic upgrade to many mobile homes, but remember that adding an ADU to your home could also lead to changes to your property taxes.
When you build an ADU for your property, your property taxes increase accordingly. However, don’t worry about the ADU triggering a property tax reassessment for your house! Instead, your property taxes just increase based on the value of the accessory dwelling unit.
Let’s look at an example:The “value” of an ADU depends on a lot of factors, like square footage, the amenities and rooms included in the ADU, and whether it has a separate entrance.
Even with the caveat of an ADU increasing your property tax, adding one to your property might be a phenomenal way to boost property value and enjoy extra living space for your family plus any guests!
Not all states allow the construction of accessory dwelling units, so it’s important to look at the rules and regulations for ADUs within your state before buying materials or hiring contractors. Every state either allows ADUs or structures very similar to ADUs, but each has its own set of requirements and restrictions.
For instance, Colorado ADUs must include independent living facilities and can’t be separate detached structures (in other words, they have to be attached to the primary property). It’s not the same way in California, which does allow detached accessory dwelling units along with much more flexibility in terms of zoning.
Because building an ADU is a distinct process in each state, it’s smart to do extensive research into your state’s ADU requirements as soon as you think you might want one. Keep in mind that each state’s ADU requirements may also affect financing options, the terms for ADU loans, and where you can get them.
The best ADUs are comfortable to live in, have lots of space, and are built in adherence to both the ANSI A119.5 and HUD building codes. These codes have strict standards regarding ADU construction, durability, and safety, and they’re important for getting financing for any future ADU you want to build.
Financing the construction of ADU housing is possible in a few different ways. For instance, you can save up money until you have enough in the bank to build a guest home or redo your garage to make it into an ADU.
For many homeowners, the best way to finance an ADU renovation is to refinance their primary mortgage, such as through a cash-out refinance. With a mobile home cash-out refinance, you can take out a new mortgage and leverage a portion of your home’s equity to receive a lump sum. Then, you can use that money to finance the construction of an accessory dwelling unit.
However, you can also get the money to build a new ADU from a separate loan, such as a “home-only loan.” Home-only financing is advantageous if you don’t own the land your ADU will sit on, as it only covers the cost of building a new accessory dwelling unit, not purchasing the land below it. Because of this, home-only loans can be affordable and accessible for mobile homeowners, especially if you finance with 21st Mortgage.
Adding an ADU to your property might be the best possible renovation you can make, especially if you’re looking to boost your home’s property value or make sure your parents have a place to stay as they downsize. Getting the financing you need to purchase an ADU is easy with 21st Mortgage.
Our loan officers can help you refinance your home loan with a cash-out refinance, especially if you’re already a partner! Contact us today to get started and learn more about our financing solutions.
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