Building a Granny Flat: 11 Questions and What You Need to Know

May 23, 2022

An accessory dwelling unit (ADU) goes by many names, one of which is “granny flat.” The term stems from a popular use of the space: to house aging parents or in-laws. And while ADUs have evolved since to serve many purposes, the name stuck around. 

No matter what you call it, there’s a lot to prepare for before beginning the ADU construction process. If you’re considering building an ADU – or a granny flat – get answers to the most commonly asked questions in this guide.

11 questions to consider when building a granny flat

Before you start building your granny flat, there are a few decisions you’ll need to make that’ll influence your ADU’s design, placement, purpose, and more. Here, we’ll answer the top 11 questions that people often ask about the process.. 

1. What does a granny flat look like?

There isn’t a one-size-fits-all approach to an ADU or a “granny flat.” That said, increasingly often, ADUs look modern and fresh, with simple designs that are unobtrusive yet eye-catching, not to mention easy to build. Ultimately, the exterior and interior of the homes are up to you or a turnkey ADU service provider that offers modular pre-designed builds.

2. What are the different types of granny flats?

There are several forms your ADU can take. Some are standalone detached ADUs, called DADUs for short, and others are attached ADUs connected to your main home. Converted garages, basements, and, less commonly, attics can also be ADUs. There are also “above the garage” ADUs built on top of the current garage structure. No matter which style you go with, all granny flats are independent living units with a separate entrance and their own bathroom, kitchen, and living space.

In general, interior conversions can present challenges that detached ADUs solve. Detached ADUs also offer the independence of living fully apart from the people who live in the main structure on the property. It has its own foundation, utilities, entryways, amenities, and everything else a home has – all right in your backyard.

3. How much does it cost to build a granny flat?

As with any home building project, your granny flat cost will depend on a few factors. Your total cost will likely wind up somewhere over $100,000, and you can stay closer to this number if you hire a turnkey ADU services provider. The cost largely depends on how you proceed with the build – will you choose more affordable offsite construction models or expensive customized ADUs? The contractors and turnkey ADU provider you’ll hire for the job can also affect your costs.

Your location, building materials, and ADU size can also affect your costs. In particular, San Francisco ADU permits cost between six to nine percent of your construction costs. Since construction can cost hundreds of thousands of dollars, a permit can cost well over $10,000. A turnkey ADU services provider, however, controls the more unpredictable costs.

4. How can I finance a granny flat?

Ten key accounting calculator on yellow desk.
Photo by StellrWeb on Unsplash

Granny flats are an investment in your property and its future, so they require a lot of planning and some thought into how you’ll pay for it responsibly. You may opt to pay for your granny flat with a line of credit, a home equity line of credit (HELOC), a loan, or cash from your savings, among other options.

Knowing your ADU costs in advance can help. If you partner with Spacial, much of your cost will be fixed. Spacial studios start at $139,000 ($376 per month on a 3.25% home equity line of credit). One-bedrooms start at $157,000 ($425 per month on a 3.25% home equity line of credit). These payment options can make your granny flat financially viable and help you plan.

5. What permits do I need for a granny flat?

Obtaining the right ADU permits is important, and often, it’s also confusing if you’re not an expert. In general, if you live within your proper city limits, you have to follow your city’s building, planning, zoning, or other departments as dictated. If you live outside proper city limits, ask your local government or county government about permit requirements before starting your ADU project. 

You may also be subject to county or state guidelines, depending on your location. In California, at the state level, these regulations work in your favor. Any ADU of at most 800 square feet and 16 feet in height with four-toot side and rear setback can skip planning approval. But even if your ADU meets these requirements, it’s best practice to check with officials before making any assumptions. You could also work with an ADU company that knows the laws in and out. 

6. How long does it take to build a granny flat?

With the right ADU partner, your granny flat has the potential to be ready in four to nine months. Spacial can be that partner if you’re building an ADU in the San Francisco Bay Area. We take care of the heavy lifting – literally, including craning your ADU into place. The easiest way to build a granny flat is always with an experienced ADU service provider that handles the entire process from beginning to end.

7. Should I build with onsite or offsite construction?

Man cutting wood
Photo by Annie Gray on Unsplash

There are two types of ADU construction: stick-built and prefab. Stick-built ADUs are assembled piece by piece, whereas prefab “offsite construction” ADUs are built to preset floor plans. These units go from the factory to your lot in one piece that’s complete on both the inside and outside.

Offsite construction reduces the amount of noise in your backyard and the time it takes to build your brand new granny flat. With Spacial’s offsite construction, your build won’t be at the mercy of unexpected thunderstorms that could delay stick-builds. You'll only have one day of backyard action as we crane your one-piece ADU into place. And when you walk inside, you’ll see complete walls, flooring, and cabinets. 

8. What is the best granny flat size or floor plan for an older relative?

In California, the average granny flat size is 615 square feet, but since every square foot can add to your costs, you may want to stick to 500 square feet. This size is great for older relatives. A studio or one-bedroom of this size at once provides ample space that’s fully accessible if an older relative has mobility needs such as a wheelchair. Alongside size, you should consider other accessibility features such as installing entryway ramps or shower seats or rails. 

9. Can a granny flat have a kitchen?

An ADU must have a separate entrance and amenities that don’t require occupants to enter the main house. Therefore, your granny flat requires a kitchen. In fact, that’s what separates granny flats from guest houses and other temporary stays.

Your local building codes likely require a kitchen, too. The absence of a kitchen is often the line between a granny flat and a short-stay guest house. However, this doesn’t mean that your ADU kitchen has to be enormous. To save space, you can install smaller appliances or build out a scaled-back kitchenette that still includes the basics for everyday cooking.

10. Are there tax savings with a granny flat?

Your granny unit can be tax-deductible if you get your ADU permitted as an income property. Doing so is only possible if you live in certain states. 

At the same time, you’ll have to claim any income that your ADU generates on your tax returns. While that’s less of a concern in the nine states that don’t collect income tax, it’s necessary in certain ADU-heavy states such as California. The best course of action is to contact a tax professional to see if you can rent out your granny flat to lower your taxes. 

11. Are granny flats worth it?

The short answer is – yes! If you have the time and ability to plan and budget properly, then granny flats are a great real estate investment in your property. They can increase the value of your property and add extra income if you choose to rent out the space. They can also house aging relatives right in your backyard or present an alternative to a hotel when guests are in town. Ultimately, it’s up to you to decide if a granny flat is worth it now or in the future. 

How can granny flats be a good investment?

Door key
Photo by Maria Ziegler on Unsplash

Enhancing your property is typically a great investment, and many California lots can legally and affordably fit ADUs. ADUs are great investments since they contribute to your total square footage, and every square foot adds more property value. They also create opportunities for passive income and give your aging relatives a place to call their own without the high cost of assisted living. There are all kinds of ways to get a great return on investment from an ADU. 

7 ways to invest with a granny flat

How can you maximize the use of your granny flat and invest in your current property – and your property’s future? Find seven investment-friendly ways to use your granny flat below.

1. Source of passive income

A granny flat can be a great source of passive income. If your ADU is approved to rent out, then you will make back the money you spent building it and then some.  

2. Short-term or long-term rental

If you aren’t quite ready to commit to leasing out space on your property for a long-term rental, then consider a short-term rental. Before you do so, though, check your city regulations – some localities only allow rentals of at least 30 days. That’s basically a long-term rental.

Short-term rentals can be great income opportunities if you live in a bustling city or town that tourists love. For example, the average rent that San Francisco ADU owners charge to rent their units through Airbnb is $191 per night. That’s an easy way to earn passive income. 

3. Increase in property and resale value

Sold sign
Photo by Robert Linder on Unsplash

It’s common knowledge in real estate that any time you upgrade or add to your property, you’re also increasing its value. In fact, those extra square feet might be the single quickest way to increase your property value. Increasingly often, California homebuyers are seeing the potential of ADUs rather than thinking of them as an extra dwelling to maintain. 

4. Low-cost housing for older relatives

Using the granny flat for its namesake purpose is emotionally and financially rewarding. After all, assisted living isn’t cheap. On average, the cost of a room at an assisted living facility in the U.S. is $3,628 per month. That means you’ll spend more than six figures in just three years caring for an older parent or relative. 

Why not invest that money in an ADU so you can keep your loved ones close by and ensure they have maximum comfort? Plus, if your older relative can help with childcare, you’ll also save money on babysitting – and the kids will get more quality time with Grandma. 

5. Housing for live-in employees

For live-in employees such as au pairs and elder care workers, separate but nearby accommodations can be a huge perk. Your ADU can ensure that your au pair is always close by while also giving them – and your family – a pleasant privacy barrier.  

6. Give your guests private space

Let’s say you enjoy hosting relatives or friends but inviting them to crash on the couch is no longer cutting it. You can always build an ADU where your visitors can stay. With your ADU for visitors, you can gather your loved ones while eliminating the discomfort of an overcrowded house. Plus, you can help visitors save some cash on staying elsewhere the next time they’re in town. 

7. Home office or hobby space

If the COVID-19 pandemic has taught us anything, it’s that working from home can be a tough balancing act. You can invest in your work-life balance with an ADU office space separate from your living space. Or you could dedicate this sanctuary to hobbies – try cultivating an art studio or a workshop where you nurture your side hustle. Potential buyers might see the value of this extra work-and-play space, especially if they work from home too. 

Build a granny flat with Spacial 

Living room and washer/dryer unit in Spacials One Bedroom ADU
Photo by Spacial

When you work with a turnkey ADU service partner, you can easily turn your granny flat dreams into a reality. Spacial can be that helping hand at every step of the way. We’ll do all the work for you so you’re free to focus on other pressing matters. That means we’ll take care of the permits and zoning viability – and get the place move-in ready in a matter of months. Meanwhile, you can help your elder relative sell their home or figure out how to find long-term renters. 

At Spacial, your property, time, and vision are as valuable as your home. It’s our mission to make expanding your space and your life as easy and quick as can be. Contact us today to learn how we can get you started on building a granny flat that suits your needs.