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ADUs - What and Why

What is an ADU and why should I consider it?

Currently Mesa County has a shortage of affordable housing approximately 4,000 units over the available rentals and under construction or approved permit locations. 

Reports from the Grand Junction Housing Authority indicate that even with the many hundreds of units approved or already in construction there are nowhere near enough units that can be rented for a rate that meets the requirements to be considered "Affordable."

Spelled with a capital "A", Affordable means rent is less than one third the median household income for the area. Spelled with a lower case "a", affordable means less than one third the average "affluent" income. Mesa County historically lags behind many areas in the country when it comes to wages and especially in the past decade, the area has outpaced many areas in property value growth and rent increases, making things progressively more difficult for those earning median income levels or less.

So how does this pertain to ADU's? Oh yeah, and just exactly what is that? ADU stands for accessory (pronounced ak-ses-oree) dwelling unit. Estimates suggest that nearly half of the current shortfall could be remedied by homeowners with adequate lot space building or converting outbuildings for residential living on their properties. As recently as a year ago Mesa County was offering significant incentives for these types of building projects including reduced and, in some cases, waived fees for permitting and utility placement.

Grand Valley Connects is one of the programs serving our community with Navigators who are trained and active in seeking out housing options for those with income, disability and mobility challenges. Some resources, like a recently discontinued directory of available rental units, have begun to make these challenges even more difficult. On average, an individual ADU built from scratch will cost around $200,000 for a two bedroom two bath dwelling. A new home similarly equipped on its own lot would cost closer to $325k with comparable living space.

One benefit to adding an ADU is the equity enhancement to a property. Whether refinancing or making a payment to cover financing an ADU, the cashflow is nearly always positive enough to justify the expense. If building to accommodate a family member or to provide an "A"fordable dwelling for lower income renters such as seniors on a fixed income, the equity improvement may still outpace the cost of ownership. If investing for additional cash flow, STR (short term rental) managers can make it somewhat passive to operate and booking services like Air B&B and VRBO have well established track records for vetting vacation renters, generally yielding much higher positive cash flow than long term leases. 

If you choose to act on this idea, be sure to check HOA covenants and local regulations for property use to be sure you stay in the clear with code compliance.

Since incentives change over time, if you are interested in the possibilities of an ADU on your property, checking with the building department for current conditions is the way to go.