This content was created by Joe Homs 949-625-4533. This content was uploaded by Joe Homs 949-625-4533. This is a YouTube video titled "California Housing Update! $25,000 Grant To Build ADU" (posted 2021-10-20) featuring Joe Homs 949-625-4533 presenting a solo commentary aimed at new and experienced real-estate investors. He explains the California Housing Finance Agency’s announcement offering up to $25,000 to low-to-moderate income homeowners for accessory dwelling units (ADUs), critiques whether the subsidy targets the right demographic and its likely impact, discusses ADU valuation and appraisal challenges, walks through payback examples (e.g., ~$200,000 build cost vs. ~$3,000/month rent → multi-year payback), and offers investing advice with calls-to-action to watch related videos and subscribe.
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In today's video, we're going to talk about Governor Newsom's new bill that is aimed at helping California's unaffordable housing shortage. The California Housing Finance Agency, the ADU program will provide as much as $25,000 in assistance to homeowners to build accessory dwelling units on their property. This is one of the latest efforts to ease the affordable housing shortage in the state, but will it actually help? Welcome back to the channel. I'm Joe Homs. Make sure that you subscribe to the channel that I created for the new and experienced investors, those who want to live the life they've always wanted through real estate. Almost 90% of California municipalities have adopted friendly ADU ordinances. Several cities and counties have even gone a bit further, establishing programs that offer financial assistance for ADUs. The California Housing Finance Agency announced September 29th that it will be offering up to $25,000 to low to moderate income homeowners to build accessory dwelling units on their properties. Or commonly known as ADUs. Critics are concerned that it will lead to higher housing costs, less homeownership, and more rental units. Okay, so, you know, what does this mean? I don't think they've targeted the right demographic, if I can say it kind of that way. If you're low to middle income, Then you probably don't have a great chance of getting a loan to build an ADU that can cost anywhere between $100,000 and $200,000. Yes, it's great to get 25 done out of there, but still they have to take on that additional debt load. And if they're low to middle, do they actually qualify for something like that? So I don't have a lot of hopes that this is going to do anything to the industry. So let me give you again my opinion on ADUs themselves. Is there that value there that you're expecting from building one? In the past, the reason that people built ADUs, and they were known in my generation as granny flats, were to move your grandparents in there, to have them in a location that's close to you, But then also separate. Building ADU, at least at this point from what I'm hearing from investors, is it doesn't add a lot of value to the property. It makes it difficult for an appraiser to appraise that property. So imagine you're going into a single-family neighborhood, you've got 100 homes, they're single story, and you're the first one to build an ADU. And then You're the first one to sell that property. How is an appraiser going to say, okay, this ADU is worth this much more when you have 100 homes around there that he's using to comp that particular property? How is he going to justify the extra, I guess, appreciation for that? Which is what a lot of investors are experiencing right now. As more people put in ADUs, great. What I do is I usually look at it as really just kind of a monetary thing. How much is it going to cost you to build the ADU? How much income you're going to derive from that? And then divide that by the cost of the ADU and you can figure out pretty much if I build this for $200,000 and I'm renting it out for $3,000 a month, it's going to take me, you know, and I'm guessing here, 7, 8, 9 years to pay this back, maybe even longer. So you've got that payback period to deal with. Are you going to stay in that property for that period of time? If you are, then great. If that's, if that's a property you're going to stay in for the rest of your life, that's awesome as well. So the payback period is 7 or 8 years. So you'll know that after that, you know, all the money that's coming in is basically, you know, going into your pocket and not going in. to anybody else's pocket, the lender, the contractor, anybody else. So that's kind of how I look at ADUs. If, if you want to take a look at another video that I did, just look right here, click on this and you'll find it here. Let me know what you think about this new influx of government money coming into the housing industry. Either way, as long as you buy right and stick to the fundamentals, you're still bound to make money no matter what the real estate cycle is. If you want to learn more on how to analyze properties, click on this video right here. I go over how to know if you have a deal or not in a matter of minutes. Feel free to reach out with any questions. As always, I'm here to help.
