5 Ways to Finance an ADU

New California laws make investing in an ADU (otherwise known as a “secondary” or “in-law” unit) an amazing opportunity for some homeowners and home-buyers:

• By building an ADU, seniors can remain on their own property while adding to their home’s value and gaining hundreds or even thousands of dollars of extra income each month.

• Home-buyers can team up with a second household (typically friends or family) to buy a home they couldn’t otherwise afford, and build an ADU for one household to live in.

And these are just two strategies by which an ADU can improve Californians’ cash flow, financial security and quality of life.

That being said, financing an ADU can be tricky, and doing so is outside the area of expertise of the vast majority of loan officers and lenders, so if you’re considering an ADU build, it’s crucial you begin by working with a loan officer who’s versed in all the various ways to finance ADUs. Below is a list of five strategies for financing your ADU project. And if you’d like to determine which strategy would work best for your situation, call me for a free consult today.

1) Cash-Out Refinance (or HELOC, then Cash Out Refinance)

This is probably the most popular and straightforward method for financing an ADU. And so long as a homeowner has sufficient income and equi