By Sharon Simonson
When is an accessory dwelling unit more than an accessory dwelling unit? When it pays for a new bicycle garage.
Two years ago Alan Williams and his wife, Susan, knew they needed better storage at their Naglee Park home for their commuter bicycles and Alan’s extensive collection of camping gear. They loved the idea of new, high-quality purpose-built space but dreaded increasing their debt and monthly mortgage payments to finance new construction. So when Susan suggested they build an accessory dwelling unit to rent as a path to their vision, Alan agreed to undertake the project.
Both Alan and Susan bike to and from San Jose’s Diridon Station to catch Caltrain to jobs on the Peninsula and in San Francisco. Susan is a registered nurse at a regional hospital, and Alan is a product manager at a technology company. Alan works from home twice a week. They’ve lived in the historic Naglee Park neighborhood directly east of downtown and San José State University for more than two decades. Their son and daughter are away at college.
“We’ve got two cars that don’t get much use anymore,” Alan said.
Naglee Park was San José’s first recognizably modern single-family housing subdivision. The family’s 12th Street home was built in 1910 as part of the early twentieth-century redevelopment of the 140-acre Naglee family estate. The neighborhood of 602 single-family home lots originally sold briskly to business people and professionals who worked in downtown San José. More than a hundred years later, it retains great popularity and a distinct, attractive identity.
In June, Alan and Susan received their first rent check from the new tenant in their new three-hundred square-foot studio apartment. The living area shares its structure with a like-sized garage where their bikes hang in a tidy row on one wall and camping accessories partially fill wooden shelving. Outside, the cottage has blue wooden siding with white trim. A small front porch nestles beneath the overhang. Its concrete slab is just large enough for a rocking chair. In relative size, shape and situation, the porch and cottage echo the small porch on the front of the main Queen Anne-style house, which has two stories and a small front-facing gable characteristic of the period architecture. The exterior of the 1,800-square-foot house will soon be painted the cottage’s same blue and white, Alan said. The 6,000-square-foot lot is still large enough to accommodate several fruit trees, a deck and a garden.
Inside the apartment, the walls are painted a zippy beige (it exists!) and the extra-wide window trim, baseboards and ceiling’s crown molding are a refreshing soft white. The windows facing the house are set higher in the wall to ensure privacy while still admitting light. A set of windows facing the garden are extra large, expanding the interior space to the outdoors. All of the windows are operable. The floors are wood, and the lines overall are clean and modern but not institutional. The space is large enough for a galley kitchen, a bathroom with shower, a closet, a three-person table, and a small living and sleeping area. Given the unit’s size and situation, they chose a garage door opener that is so quiet it is nearly silent, as are the Bosch appliances.
The tenant pays $1,800 a month, well more than enough to cover the $1,000 increase in his monthly mortgage, Alan said. But he’ll need time and experience to observe and record other costs that he has only anticipated, such as additional property and income taxes, higher maintenance expenses and utilities, and larger premiums for home insurance.
The couple decided to build the ADU in the fall of 2017. After contacting several contractors, they selected a Naglee Park neighbor who also owned a contracting business and had begun to focus on ADU construction as the city had clarified its intent to make them part of its long-term housing strategy. They settled early with their bank on the terms of a cash-out refinance of their home mortgage. The bank agreed to lend up to 80 percent of their home value, and they accepted $300,000 in cash to build the studio and garage. For a period of time in the middle of the project’s design phase, Alan regretted his early decision to settle for that sum as he realized it would be enough only for the studio apartment and the one-car garage. They had hoped to build a living area closer to six-hundred square feet and a storage area closer in size to a one-and-a-half car garage. But in the end it worked out for the best. “The money you get for a three-hundred square-foot studio versus six-hundred square feet isn’t double the revenue,” he said.
The couple built the ADU before the city initiated its new, expedited permitting process for homeowners seeking to build the accessory units. Every month of additional planning, permitting and construction time raises the cost to finance the overall project. However, once the apartment was complete, they secured a tenant in fewer than sixty days, initially asking $1,900 a month.
In total, Alan estimated it took about eighteen months to finish, beginning in January 2018 with design, initiating construction that fall, and offering the property for rent this spring. All in all, he is pleased and satisfied with the project’s results. He also believes the new backyard units can help increase the city’s housing supply for the benefit of all.
“It is a good thing,” he said.
Photo Credit: Acton ADU