The Benefits of ADUs for Retirement & Multigenerational Living

SPEAKER_00 0:00

Welcome to the first box and flame podcast, for we turn with hard funding and to the football fighting. Your host card security slides, everything from the first order and staying foot style to Medicare, Social Security, and home safety. Wait, there's more. We're not just gonna talk all about money and business. As we chat with travel pros, party planners, and a lot of different topics that's gonna help you make the most of your golden years. So grab a cup of tea or whatever it is you want to drink, get comfy, and let's make retirement planning an adventure of a lifetime.

SPEAKER_01 0:36

Hi, this is Carl Spateri with Boomers, Bucks and Bling. I want to welcome Brandon Spann. He's been a guest before, and he's here today to talk about ADUs and uh and that type of uh uh uh idea, I guess, on your property that you already own. Uh Brandon, welcome. Why don't you tell us a little bit about yourself and a little bit about Lars?

SPEAKER_02 0:55

Yeah, thanks, Carl. Thanks for having me back. Um yeah, Lars uh remodeling and design. We're a local San Diego company. Uh we've been doing this since 1991. And uh we're a full service design build company, which makes us responsible for designing projects, understanding what the limitations are with building departments, uh specifically when it comes to ADUs, because there's a lot of uh, I think there's a lot of good information and there's a lot of misinformation out there. And um we're responsible for for building it as well. And uh as I as uh we talked the last time we were together, is I think what makes us unique in the sense that uh uh being as full service as we can, we also uh sell and distribute appliances and plumbing fixtures to not only our clients, but also to general public.

SPEAKER_01 1:45

That's great. Um well thanks. Um why don't we why don't we start this? This is more of I think it's gonna be more of a conversation between you and I we're gonna kind of talk, you know, I'm the I'm the mortgage guy or I'm the finance guy. Numbers make sense. And you're you're uh a design and and contractor type of mindset. And sometimes the two have to collide uh for the benefit, right? So may maybe it'll take a little bit different format to it. Who knows where this goes? But tell okay, so why don't you describe what an ADU is? It's an initial what if I don't know what it is?

SPEAKER_02 2:17

Yeah, absolutely. Uh you hear ADU, what's ADU? Uh ADU stands for accessory dwelling unit. So it's an accessory to your main, your main residence. It used to be like Granny Flat, mother-in-law quarters, those sort of things. Uh it's it's kind of uh uh developed over the years to be more than just just that. Uh so it is an accessory dwelling unit that you're adding the ability of putting on basically it's another uh another single family residence in a sense on your property.

SPEAKER_01 2:52

So so what if what if I don't know whether I'm allowed to have an ADU on my property? I mean, I would assume there's ordinances and zoning and things like that that I have to worry about.

SPEAKER_02 3:02

That that's exactly right. And and those uh the those that that zoning um uh restriction that you have is different really throughout the county. There's all different building departments. There's not just one building department, there's city of San Diego, there's the county, of course, there's Lemon Grove, National City, Solana Beach, Del Mar. They all have um the requirements from the state, and then they can actually add additional requirements on it. They can't make it easier, they can make it a little bit more difficult. So um it all just depends on uh what part of the county that you do you do work uh live in. But um getting an understanding, you can either uh talk to really any professional or contact your uh your uh your building department and they'll let you know um what you're what you are able uh what you are able to do.

SPEAKER_01 3:55

It's my understanding from the passage of Senate Bill Nine that they are they are easier to do than they they may have been in the past. Is that a true understanding?

SPEAKER_02 4:04

It really it really is. And I it's it's it's in it's always interesting of how the government works. I think they they kind of depend on, right? It's one extreme to the other. Um so they it used to be extremely difficult, very, very, very difficult, whether it was uh what zone you lived in, what your setbacks were, uh parking restrictions, those sort of things. Uh and they have really opened up the floodgates with uh these ADUs of if you're within a certain uh uh every building department's different, but if you're well within uh mass transit, they waive the parking requirements, those setbacks that most homes have uh setbacks of being away from your neighbor by four or five feet on each uh each side of your home, maybe 13 to 15 feet in the back. Um, and then the front is usually about the same. But they've waived a lot of those restrictions as well, which is allowing homeowners to put these ADUs literally inside their setback, which I would say is good for the homeowner, sometimes not good for the neighbor. Um, but uh I think what we're gonna see is as time continues to progress and as people are taking advantage of these kind of looser restrictions, that pendulum is gonna swing back the other way because we're already starting to get a lot of pushback because of parking, right? So when people put in these ADUs, uh that means more cars are coming. Doesn't necessarily mean that they're gonna be taking advantage of our mass transit. So we're seeing that a little bit more and more.

SPEAKER_01 5:42

How big is an ADU?

SPEAKER_02 5:44

I that yeah, that's a it's a good question. I I don't believe that uh to my knowledge, there's a minimum size. Um, there's a maximum, uh just kind of blanket statement of uh 1200 square feet. But it just depends on if you're attaching it to the house or or or being detached uh from the home. There are certain restrictions of of how much you can actually build on your property from the floor area ratio, the lot coverage, what the existing house size is right now will all dictate how much space you're able to add with uh with the ADU.

SPEAKER_01 6:21

Okay, so you're a builder and you know what 1200 square feet looks like. I'm a lender. What what's what's uh what's 1200 square? I mean, maybe if I live in a 1200 square foot home, I can draw a parallel, but but I would assume the design's gonna be different. And uh so what is like a a two-bedroom, one bath, a kitchen, and a family room? Well what is that normally around?

SPEAKER_02 6:44

Yeah, I think that's a I think that's a good question. I'd say uh uh a two-bedroom, one bath is as your question uh is is that I'd say you could probably accomplish that about that thousand square feet. It's all gonna really be dictated on how big of a bedrooms you're looking for, right?

SPEAKER_01 7:01

Well, we want the bedrooms large enough to be able to have the wider hallways and the walk-in showers and the you know the lower countertops and that kind of thing. So right, it would have to be built right now.

SPEAKER_02 7:12

Yeah, I yeah, I think it's it just depends on what the what the purpose of the ADU is, right? Because we're getting uh some homeowners that are building these ADUs to bring family in. We're getting some homeowners that are doing these ADUs for um uh uh for revenue. We're getting we're getting some homeowners building it for being guest quarters. It's it's all different. So uh, but as a as a blanket statement of what would a two-bedroom, one bath, I'd say uh for a nice, nice size bedrooms, uh uh by 12 by 12s, maybe 12 by 13s um bedrooms, and then the the bathroom, you we all have seen those little five by nine, small little bathrooms, which is a little 36-inch vanity, the toilet, and then the tub shower. Um, that would probably be pretty standard in that scenario. Or if you're wanting to go a little bit larger, or maybe even add a third bedroom, compromise on the size of the other uh other bedrooms. You could probably squeeze in three bedrooms, maybe two baths uh in that 1200 square feet and still have the kitchen and living room.

SPEAKER_01 8:20

It'd be relatively comfortable, it'd be doable as a either as a rental or as a move-in.

SPEAKER_02 8:26

Absolutely. One one 100%. Uh I personally will be putting on an ADU at my home uh for multiple reasons. It's but long term is where my wife and I will eventually move into and actually probably rent out our house while we're bouncing around the country doing other things. But yeah, it's all dependent on what the uses uh your your um long term and and that's how we would design around that.

SPEAKER_01 8:54

So so you just you bring up a good point. So I like the term multi-generational housing. And I I feel that as things get more and more expensive in in Southern California and San Diego, but pretty much across the country, it's getting harder and harder for people for it for first-time homebuyers to kind of get a leg up. And maybe a jolt multi-generational situation would come up where where the the the children live in the ADU helping helping the parents. Well, have you done anything like that?

SPEAKER_02 9:24

I I know you you mentioned you might do it, but yeah, no, and that's probably the majority of the the projects when it comes to an ADU that we're doing is for that multi-generation, whether it was mom and dad's house and they're now going to accommodate uh one of their kids and family or whatever that scenario may be, or the other way around where it's the kids' house and they're bringing in mom and mom and dad. And we all want our personal space. I mean, we love our families to death. However, it's nice to have that little bit of separation. But I I would say by far the majority of the time that we're putting ADUs on someone home, it is for that multi-generation living, um, which seems to make sense. As you pointed out, I mean, San Diego is only getting more expensive. And uh it's it's not it's not easy, especially as a first-time home buyer, um, where this this is one of those things that I I think really helps homeowners today, but then also helps them in in the future as as well.

SPEAKER_01 10:28

So so an ADU can either be connected to the existing home or it can be a separate, depending on on lot size and that kind of thing. Uh any anything, any any way that it's more favorable, have you seen any any kind of I would assume being separate from the main home would be the most favorable, but any thoughts on that?

SPEAKER_02 10:46

Yeah, I I think I think that uh it it it goes back to what you're what you're utilizing it for. Uh and then the lot, as you as you pointed out, that uh if you're using use utilizing it for that kind of multi-generation generational living, I I think you could probably argue either way, uh depending on what your property is. My my mind is actually not too far from the world that you live in. I look at it from a financial side of things. It's definitely more inexpensive to have it attached to the house than it is detached. And the reason for that is that you have to look at how are you getting the electric there, how are you getting the gas there, how are you getting the the sewer line, how are you getting all of the the infrastructure of the of uh of the home, the main residence to accommodate the uh the the ADU. There are some situations that's not true, but just the vast majority of the time, it is typically less expensive to add on that ADU to the existing home. And in some scenarios that you can even steal from Peter, I always say to PayPal, there might be a bedroom or space downstairs that you just don't utilize very much, that that space could be used for that ADU along with adding additional square footage. So you might think, oh, I need 1200 square feet, but you're really only building 800 square feet because you have 400 square feet of X in your existing home that you could utilize and just give it to the ADU uh instead of your main residence. But uh those are the things that we're always looking at is how we're gonna get the power, the gas, um, the sewer uh are are always big big cost drivers when uh we're looking at um building an ADU for somebody.

SPEAKER_01 12:40

Okay, so so I'm uh I'm I'm a baby boomer. I've lived in my home for 25 years. I got a pretty good uh property tax rate. Yeah. And now I'm gonna build an ADU. What's that gonna do to my taxes? Yeah, I think that's you're not a tax person, by the way. We'll we'll both put our disclaimers out here, right? Yeah, totally exactly, right?

SPEAKER_02 13:00

Yeah, fair enough. I think that was a yeah, smart call because I definitely am not. Um but uh yeah, so you actually keep your tax base the way that it is right now. And then uh when we pull the permit, or when your builder pulls the permit, your architect pulls the permit, your uh your building department is actually gonna put together what they call a valuation. Not it, I think a lot of homeowners always hear evaluation. It's a valuation. So they're putting a value to what you're adding, and that is where you're gonna get based off of the supplemental, you'll you'll get taxed on that supplemental uh assessment. And the the cost, the actual cost to build it, and then the uh the valuation are quite a bit, quite a bit different. So that's where you're you're looking at from a tax perspective, it's always gonna be more cost effective just to remodel your existing home than, like you said, you've been in your house for 25 years, leave, go find something else, which we all know, uh, especially in San Diego. Like I I have yet to find a home that you can move into that's ready, right? So whether whether it's your house or the that future home, you're gonna you're gonna see your contractor no matter what.

SPEAKER_01 14:14

And of course, in my world, we can use the reverse mortgage as as a vehicle to kind of get that all built. So a whole different uh podcast, but uh we'll talk about it eventually. So so w any kind of recent success stories you have, or you know, where you went in and kind of saved the day uh for a either a multi-generational or income need. I mean, you can you don't have to move family in, right? You can you can move into the small, the small ADU you just built and rent out the big house. You can stay in the big house and rent out the ADU. It's it's a way to create income in retirement as well. Any kind of like, wow, this is really cool. We were involved.

SPEAKER_02 14:53

Yeah, I would say the last one was up in um in Cinitas. Uh kind of a sad story of their previous contractor went out of business, took all their money, and before the project had even started, they they were just about to get the the permit on. So this was a uh uh homeowner whose daughter, husband, and son were gonna move in with the mom and dad. And the the dad had, I should say had, has some health issues. And um, the the whole idea was is that she was gonna move in with her family to help her mom uh take care of her dad. So we were able to kind of help redesign the project because we didn't feel that they were taking just the idea of the ADU was there, but it's also the aging in place element, which is actually the last time we were together, I ironically. But uh the whole idea there was is not just thinking about today, but also let's think about tomorrow. So when um this particular homeowner, I'm trying so hard not to say their names because I'm not sure if I'm allowed to or not. Um but the whole idea there was is that uh I'm I'm I'm 48, and so was this the daughter. And the the idea was is live in with mom and and dad. And then obviously life is gonna happen and they're eventually gonna pass was for them to move into that ADU once their son is obviously out of house. And it kind of that circle, that circle of life right there that their son would move in with his family and kind of do that. So it became kind of a uh a long-term family. I don't want to call it a compound, but um uh plan anyway, right? Yeah, a plan. Yeah, it exactly. I I would say that's probably the the the the one that first came to mind. I mean, there we've had uh another situation where um we we built the uh the adu for this in this case it was the reverse. They were bringing their their parents in uh to their home, and this was uh detached. And the the idea there was is mom's moving into the property, nice size property in Al Cajon, but she was there to help take care of the kids while they are that is such a big a big thing in this in this economy, isn't it?

SPEAKER_01 17:14

You get quote free day daycare, uh you know, whatever you want to call it. Right, well it's a it's a win-win, right?

SPEAKER_02 17:21

I I think uh I I I know that uh the the grandmother that was moving into this detached ADU, she was tickle pink because now she gets to see her grandkids literally every day and watch them grow up. And um obviously as as we were just saying, that the the the parents are reaping the benefits because they're not paying for this uh uh this daycare. And I mean who's better to watch your kids than your family? So uh it really is. It's a it's a win-win situation. And my kids are grown now. So uh in fact, my youngest, it's his birthday today. He's 18 today. But I have no idea what the cost of daycare is. I have to only imagine that it's probably three times what I was paying when they were when they were little ones. And that was pretty expensive back then.

SPEAKER_01 18:08

Well, I know the cost of going into facilities if you if you're if you're a senior and uh the you know the the live-in facilities, I mean it it's it's astonishing when you when you see the numbers. I mean, we're talking eight to fifteen thousand dollars a month to live in some of these places. And I mean there's there's one here in down the street from my office in La Jolla that I won't even I wouldn't talk about, but I mean it's it's pretty substantial. So when you think about the investment into your home and the generational aspects of passing on your home or your or your estate and what moving into an assisted living facility can do, I mean there there's some serious math there to consider.

SPEAKER_02 18:52

It it really, it really is. And I I we just we literally just are on the the the tail end of of that exact scenario. And what we never understood about that is is we always thought, okay, assisted living, and we looked at the cost. Well, my wife's aunt needed to go into assisted living, and I had no idea there were even different levels of assisted living, and she needed she needed 24-hour care. So what we thought, oh, this is gonna be six, seven thousand dollars. We ended up having to put her into a facility that uh was twelve thousand dollars a month. And I mean, that's just not one of those things that that you think about of oh my gosh, how do you prepare for for that? And um it is, it's it was it was surprising for all of us that we had no idea. I mean, obviously, this isn't something that we're we're we're in that market every day, and you don't know what you don't know until you need to know it. And and we had a crash course for sure.

SPEAKER_01 19:51

Exactly. And that's the and that to me, that's the benefit of of doing the planning. When you know, when my clients come into the office, we we talk about, you know, okay, we we'll we'll help you purchase, we'll help you refinance, we'll get your reverse, you know, whatever. But what's the plan? What why are we doing this? There's more than just the immediate. It's kind of the same thing with you guys, right? When somebody comes in your showroom and says, I want to blow up my kitchen and start over, it's great, but what's the plan for your life? What's the plan for your house? And I think that is just so important in these conversations.

SPEAKER_02 20:21

Yes. Yeah, we talk about the core. Like, what's the core reason, not only today, but are we thinking about the future as well? I think it's a natural tendency for a lot of people just to think about what are my needs right now? It's like I don't like my kitchen. Let's blow up my kitchen. Okay, well, fair enough. We can we can do that. So, yes, we need to accommodate the the aesthetic or maybe the layout, but let's talk about is this uh is this a forever home? Is it a or is this a two-year plan, a five-year plan? And if it's a forever home, well then let's think about how we're gonna utilize this space, not just today, but but in the future as well. So you're not forced to go through a kitchen remodel or any type of remodel twice, one because of cost, but just as important, I would say, because of just the inconvenience of having me or anybody in your home for uh an extended period of time, right?

SPEAKER_01 21:16

Well, Brandon, thank you very much. This is very, very helpful. I I think our audience is gonna really appreciate the information uh that we talked about here. And I can't thank you for being part of these uh podcasts. And uh again, have a great day. Okay. Thanks.

SPEAKER_02 21:31

I appreciate it, Paul. Thanks for the time.