If you own a suburban dwelling and want an extra source of income, you can build an accessory dwelling unit or ADU close to the main house and rent it out. An ADU is a small standalone house with a separate bathroom and kitchen area.
Construction projects are not easy to start and manage because they require planning, time, and money. Below are 4 easy steps you can use to make your ADU construction project easier.
1. Design the ADU
You have two options when it comes to designing your ADU: do it yourself or hire a professional. If you have the time or want to save some money on the construction project, design the ADU yourself. Do some research and find out what you need to build an ADU, take a short online course on designing houses, and if you feel confident enough, create your design.
Although you can still ask for a loan without the design, it makes work a lot easier when you have it. Furthermore, the bank is more likely to give you money if they see your project. The design is also needed for getting a construction permit from the local authorities.
2. Get a Loan Pre-approval
After you are done with your design, go to the bank and apply for a loan pre-approval. The bank will take the application and do a background check on you. The bank will check whether your current income and expenses make you a risky borrower. After they determine your level of risk, they can either accept or deny your loan pre-approval.
If you are pre-approved for a loan, the bank will tell you how much they are willing to give you and the repayment terms.
3. Get the Design Approved by Local Authorities
Before you start building the ADU, you have to get approval from the local authorities. First, go to the building or construction department to get the design approved. If your design meets local zoning regulations, it will be approved fast. After that, you can begin the application for a construction permit.
Usually, you have to pay a small fee to get the construction permit. Once the permit is approved, you can find a contractor to begin the project.
4. Sort Your Finances
The reason why you shouldn’t apply for a loan immediately after it has been preapproved is that the local authorities might demand some changes to the initial ADU design plans before they approve it. Those changes could cost you if you hadn’t budgeted for them.
After getting approval from the local authorities, begin the loan application process and start accepting bids from contractors.
The above steps should make work easier when building the ADU; they will help you to minimize your construction costs and make sure that the project is finished on time.