Prefab tiny homes: Here’s what you need to know – Part 2

With housing costs soaring, many homeowners are looking for creative ways to maximize their property value while providing additional living options. ADUs offer a flexible, cost-effective way to generate rental income, accommodate aging family members, or even provide young adults with an independent living space—all without the need for costly relocations or massive new developments. And, as cities across the U.S. relax zoning laws and streamline permitting for these backyard beauties, the path to establishing a prefab Accessory Dwelling Unit (ADU) has never been clearer.

Modern-day prefab ADUs aren’t simply small homes; Design concepts can demonstrate how creativity, thoughtful layouts and striking aesthetics can transform small spaces into luxurious, livable havens.

Here are insights to consider if a prefab ADU is on your radar.

Do prefab ADUs lose value?

ADUs are considered part of your real estate just like custom ADUs are. So you’re really looking at how much your overall property value will increase with an ADU as opposed to without one.

The generally accepted wisdom is that if you plan on adding an ADU and selling your house within the next several years, you may not recoup the cost of construction. But over the long run, an ADU is likely to give you a great return on investment. A Porch Survey found that in the Pacific region of the U.S., homes with an ADU see an average 35% increase in resale value over homes without an ADU.

An additional living space not only enhances the functionality of your property but also makes it more attractive to potential buyers. When building a garage conversion ADU, some homeowners are worried that losing their garage may deter some buyers. But, studies show that many buyers prioritize additional living space over a traditional garage, especially in urban areas where parking may not be as critical.

The added value of an ADU often outweighs the loss of a garage, making it an appealing feature for future buyers.

Are modular prefab ADUs durable?

Just because prefab ADUs are built in a factory doesn’t mean they’re more susceptible to weather or earthquakes.

It’s just the opposite!

Not only must prefab ADUs meet exactly the same building code standards as stick-built homes, they must also be able to sustain those standards after being transported hundreds of miles to your site. For that reason, prefabs may be built even tougher than state regulations require.

Are prefab ADUs more affordable than custom ADUs?

A big myth about prefab ADUs is that they’re cheaper than stick-built ADUs. That is not usually true. In most cases, prefabs and stick-built ADUs of a similar size and quality cost about the same.

Going on most prefab manufacturer sites, you’ll often see pretty affordable quotes that are lower than what custom stick-build ADUs are going for, but keep in mind that they’re most likely showing you the cost of JUST the unit itself. Remember, you’ll still have to pay for site prep, transportation, installation, and more.

There are a few companies that specialize in low-cost prefabs, and they’re worth checking out if your budget is tight. But keep in mind that if their factories are hundreds of miles from your lot, the cost of transportation may eat into your savings.

Keep in mind:

• Cost of materials fluctuates from year to year, and even over the course of one year.
• The prices above reflect both very high-end and more modest units.

The prices include the installation of the ADU–very important because it’s quite different from the prefab company’s “base price.” The base price may include the unit but not the installation or certain other construction phases.

Prefab companies should give you a current itemized quote that clearly states which costs are included in the base price and which are not.

Ideal lots for a prefab ADU

You don’t need an enormous flat lot in order to install a prefab ADU. But some lots are especially well suited to prefabs:

• Flat or gently sloping land, not a steep hill. Property with a slight slope can be leveled and retaining walls built, but hillside property can be too expensive to prepare or not geologically sound enough to meet building code requirements.
• Wide street. Large trucks and equipment are used to deliver and install prefab ADUs, so your street must be able to accommodate them.
• Straight access streets. The trucks need to get to your house, so there must be fairly straight streets on the route as well as directly in front of your property.
• Large driveway (not required, but it helps). The closer the trucks can get to your backyard, the easier it’s going to be to install the prefab ADU. If there’s plenty of room in your driveway, a modular ADU may be moved into place on rollers. Otherwise it will have to be lowered in on a crane. Panelized prefabs arrive in sections rather than modules, so they are easier to move into place, but a large driveway means less chance of other parts of your property getting dinged during installation.
• Minimal or no power lines in the path of the crane. Power lines are the bane of ADU installation in many urban areas. With either custom or prefab ADUs, you may need a special permit to build within a utility easement. But physically craning the prefab into position may be impossible if power lines on your property are blocking the access. Even if you are willing to risk craning it over the lines, city and county utility companies won’t let you do it.

There are pros and cons to prefab ADUs, to be sure. In the end it depends on your property’s characteristics, your timeframe, and you! What’s really important to you? It’s a lot to think about.

Jon Grishpul is Co-CEO of GreatBuildz. This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the editor responsible for this piece: zeb@hwmedia.com.