Once you start really thinking about putting an ADU in your back yard, the questions start to pile up. What size ADU can fit on my lot? How will an ADU affect my taxes? Is my shed an ADU? We’ve compiled the most common questions below in two sections –ADUs and Guest Houses. If your questions aren’t answered below, don’t worry! That’s what we’re here for. Reach out to us at info@ atladuco.com and we will help fill in the blanks.
FAQ responses are based on zoning and interpretation information at the time of this document’s preparation. The home owner is responsible for confirming allowed uses, particularly those related to leasing, short-term rental, and insurance. The ATL ADU CO will evaluate zoning possibilities for your project during the Feasibility Phase.
DO YOU PROVIDE CUSTOM DESIGNS?
No. We are focused on efficiency and budget, which is why we offer a lineup of pre-designed models in lieu of custom designs. By minimizing the number of options, we have more control over the budget and schedule and can avoid some of the surprises and roadblocks common to the design and construction process.
WHAT IS THE DIFFERENCE BETWEEN A GUEST HOUSE AND AN ADU?
Primarily, the size of an ADU is limited to 750 SF, while Guest Houses are limited to 30% of the main house on the lot. ADUs are legally allowed to have full cooking facilities, whereas Guest Houses can have an amazing wet bar, but not a built in stove. And while ADUs are permitted to house long-term renters, Guest Houses are not (unless you are a Watchman or a Servant - really!)
ADUs count towards the allowable buildable square footage (your FAR - Floor Area Ratio) of your lot, but Guest Houses do not. This means that if you want to build an ADU, you would not be allowed to build as big of a house. Most existing houses don’t max out their square footage, so this is typically not an issue.
WHAT ARE THE REQUIREMENTS FOR OWNING AN ADU?
1) ADUs cannot be sold separately from the main house (hence the term accessory).
2) The total number of units on the property cannot exceed two, including the ADU.
3) Except in the case of home occupations, no accessory use shall be permitted or allowed for a commercial venture.
4) The unit must be 750 SF or less.
5) There is no minimum lot size required but you cannot create a new substandard lot of record in the city.
6) No direct access road is necessary.
7) There is no needed parking space designated for the ADU.
HOW DO I KNOW IF MY HOME MEETS THE ZONING CRITERIA ASSOCIATED WITH AN ADU?
In Atlanta, ADUs are allowed on R-5, R-4, and R-4A-zoned lots. In 2017, the ordinance was amended to allow a lot to be subdivided in a zero lot-line fashion (currently allowed) so that each unit of a duplex can have its own ADU. However, everything is still limited by the lot coverage and square footage limitations of the overall zoning.
Lot coverage requirements and square footage limitations of the overall zoning are as follows: 20’-0” height limit, 25% rear yard coverage, 55% lot coverage, and 50% FAR (65% at lots smaller than 7,500 SF). ADUs may be no closer to neighboring houses than to the primary house on a lot, but ADU side and rear setbacks are 4’-0” instead of the standard 7’-0”.
If that’s all Greek to you, let us know! We can help you determine whether or not it is possible to build an ADU on your property.
DOES YOUR PRICE INCLUDE ANY APPLIANCES?
We provide hot water heater, HVAC, all plumbing and lighting fixtures, and garbage disposal. Following preliminary analysis to determine whether an ADU is possible on your lot, we will provide a unit-specific ADU Finish Package for additional information on included appliances.
WHAT KIND OF FINANCIAL RETURN CAN I EXPECT?
Home equity loans are currently running at between 5.0%-6.5% depending on a variety of borrower factors. This means the following:
A monthly payment for the one bedroom unit would come in between $550-$750 per month(best case construction cost and rate versus worst case). Add in an extra $100 per month for estimated taxes and insurance and you have an all-in cost of $650-$850 a month.
The two bedroom unit would range $800-$1,000 all-in.
(All this assumes that you, as the borrower, are putting no money into the transaction - that you
are borrowing 100% of the costs.)
There is a lot of discussion of affordable housing in Atlanta currently. There are also a range of “affordable” housing costs. Workforce housing is intended to house people that make slightly less than the metro average (20% less). So let’s compare the workforce housing rent limits to the costs listed above:
One bedroom: Rent and utility costs of $1,123 per month
Two bedroom: Rent and utility costs $1,348 per month
Understand that these rent targets are not legal or zoning requirements, but voluntary housing costs provided solely for reference. Market rents in most neighborhoods are typically much higher than these targets provided above as well. There are no restrictions on what amount individuals rent their personal ADU for. We simply like to demonstrate that an ADU can be a worthwhile investment for an individual when rents are in line with our workforce housing rent targets.
While it is an option to submeter your ADU and monitor electricity and water usage separately from the main house, most users stick with their single existing meter. ATL ADU CO ADUs are built to be highly energy efficient and have a minimal energy footprint.
Please be sure to verify all these financial assumptions with your lender. Interest rates are in flux, and this information can quickly become out of date.
WHAT ABOUT AIRBNB?
We are seeing significant demand for Airbnb units close to MARTA, with apartments, spare bedrooms, and whole houses in constant demand. Running an Airbnb requires much more engagement than an apartment, but the returns are significantly more. We are not advocating for or against the merits of Airbnb, but we do recognize it exists, and provides an opportunity for a homeowner to capture additional income. This income can be a critical component of housing security for older residents that have limited options to earn more to pay for increasing property taxes in rising neighborhoods. Our ADUs have the ability to easily shift from short-term to long-term rental if the hassle of running an AirBnB becomes too much.
HOW MUCH WILL MY PROPERTY VALUE INCREASE IF I ADD AN ADU?
A study conducted using data on ADUs in Portland, Oregon showed that ADUs contributed an average of 25% of a property’s total appraised value when rental income is considered in the assessment. We will have to see how local county appraisers look to treat these from a calculation standpoint.
WILL TAXES GO UP BASED ON INCREASED SQUARE FOOTAGE OF MAIN + SECOND DWELLING?
Appraisers and assessors often struggle with determining value of an ADU due to lack of comps. Expecting an increase of taxes based upon additional square footage is a reasonable assumption.
IS THERE A WARRANTY OR GUARANTEE ASSOCIATED WITH YOUR SERVICE ?
There is a one year builder’s warranty provided.
IS THERE INSURANCE THAT NEEDS TO BE ADDED FOR AN ADU ON MY PROPERTY?
Yes. You should extend your home insurance to cover the ADU. Contact your home insurance agency for quotes. You should also ask your tenant(s) to purchase renters insurance so that they are covered for liability and their personal items.
IS THERE ANY TERM ASSOCIATED WITH RENTING OUT THE ADUS?
ADUs do not have a lease term limit like Guest Houses. We recommend researching online for a lease that fits your needs. There are also several web based property management companies that provide a range of services to simplify the rental management component for a fee.
MY BACKYARD IS LOWER THAN THE STREET. WILL I HAVE DRAINAGE ISSUES?
ADUs located in lower back yards often require additional stormwater management, elevated building slabs, and sanitary sewer pumping to the home’s existing public sewer connection - typically located between the primary residence and the street. However, this is not always the case, and these back yard conditions can be evaluated early in the ADUCo Process. The ADU Co team includes civil engineers and architects well-versed in these areas and can help you evaluate if your lower back yard is still a good candidate for an ADU.
guest house faqs
HOW BIG DOES MY HOUSE NEED TO BE MEET THE 30%?
For the 1 Bedroom: 1716 sq. ft.
For the 2 Bedroom: 2616 sq. ft.
You can also include your unfinished basement and attic (with an overhead of 6 ft.8). Remember that attic space with head height of more than 7’ can contribute portion of space towards your needed square footage (but it is discounted by 50%).
DOES THE PORCH/DECK COUNT INTO THE SQ. FT. OF THE DWELLING? DOES AN OUTDOOR KITCHEN BETWEEN THE DWELLING AND THE MAIN HOUSE COUNT TOWARD SQ. FT. OF DWELLING IF THEY'RE CONNECTED BY A DECK?
Unconditioned space does not count towards your square footage/FAR if you are trying to increase the size of your home to count towards a larger ADU. Porches do count towards your lot coverage whether covered or uncovered.