ADUs

What is an Accessory Dwelling Unit or ADU?

In 2010 changes were made to Denver’s zoning code to allowed Accessory Dwelling Units (ADU) — also known as granny flats, carriage houses or casitas. As Denver struggles with growth, ADUs are an option to add housing without scraping existing homes and changing the architecture of neighborhoods. They are smaller homes built in the alley that have proved to be a successful strategy in other booming cities such as Seattle, Austin, and DC facing housing shortages and rising prices.

Finding ADU Zoned Properties in Denver

LivingRoomDenver.com is the only website that identifies ADU zoned properties. To qualify for to be able to build an ADU, your property must have the right zoning and lot size. There are 26 zoning codes and for each zoning code there is a specified lot size requirement that must be met. Most real estate agents don’t even know what an ADU is, let alone the specific zoning codes and lot size. On this website, we’ve done that work on the backend to sort through all 26 zoning codes and cross referenced them to the lot size to give you all ADU zoned properties for sale in Denver county.

View Listings Zoned for an ADU

BluePrint Denver and ADU Zoning

In 2018 the city went through a large scale planning process with the community to inform the future of Denver’s land use. The outreach resulted in a visioning document and recommendations. Recommendation number four says “Diversify housing choice through the expansion of Accessory Dwelling Units throughout all residential areas”. For now, the city will approach this recommendation by allowing variances for ADUs not properly zoned on a case by case basis. The BluePrint Denver plan states, “Until a holistic approach is in place, individual rezonings to enable ADUs in all residential areas, especially where adjacent to transit, are appropriate. These rezonings should be small in area in order to minimize impacts to the surrounding residential area.”

Uses for ADUS

There are many benefits of buying a property that enables you to build an Accessory Dwelling Unit. You can use the unit to generate rental income with long term tenants or short term AirBnB guests. ADUs are a great option for aging parents or teens who you want to keep a close eye on, but still need their own space. For some families, an ADU may help them accommodate loving grandparents or a nanny who assists with childcare. While others may use the additional space as an office or studio for art and hobbies.

Interested in Purchasing an ADU Zoned Property?

There are many intriquises about ADUs that a buyer should beaware of when purchasing a property zoned for an ADU. Working with a Living Room agent who specializes in these properties will protect you. Living Room also offers a special “feasibility study” by a licensed architect who also specializes in ADU to verify that the lot will accommodate your dream ADU before purchasing.

ADU FAQs

ADUs must be built 5 ft from the southern lot line if it is over 17 ft tall to minimize the shadow on your neighbors property.
The second level of an ADU must be 75% of the ground level.
Depending on lot and design, your ADU can only cover 37.5% to 50% of the lot.
The city will require you to repair or build sidewalks when you pull a building permit for an ADU.
Building an ADU usually costs $200K to $300K depending on the size and finish level.
Traditional 30 year loans are not available to finance ADUs. Common ways to finance ADUs include cash, HELOC, Home Renovation Loan, or a one year construction loan.
In most cases, you cannot repurpose an existing garage and utilize it as an ADU depending on the foundation. Foundations requirements on habitable space are different than requirements for garage
In order to be approved for a permit, the request to build an ADU must come from the primary resident who lives in the main dwelling in single unit zoned districts.
Most of the city does not allow decks on ADUs.
There are no parking requirements for ADUs unless you want the lot coverage exception (if you want to cover 50% of your lot, 80% of the ground level needs to be parking).

Helpful Articles about ADUs

Check out this article to understand the history of Denver’s zoning changes, learn about Kassidy’s ADU journey, and other people and initiative around building ADUs in Denver.

5280 Magazine does an annual issues about Real Estate. Their 2019 reporting included 11 predictions about the Denver real estate market. Prediction #8 said, “Granny flats—also called mother-in-law suites or accessory apartments—will become more popular, as long as local municipalities ease up on regulations.” The journalist showcased Kassidy’s vision for the future of Denver.

Realtor magazine, July 2019 article

showcased how Realtors are working to make a dent in the housing gap using multiple approaches: teaming with builders to create more inventory, overcoming not-in-my-backyard mindsets, or becoming stronger voices for the zoning and regulatory changes many governments are weighing as a way to increase housing density and affordability.

ADU Resources

Builder

L&D Construction – Sarah Senderhauf
O:303-895-9979 C:720-883-2717
sarah@ldconstructiondenver.com
www.ldconstructiondenver.com

Lender

Troy Williams – Loan Officer, NMLS 1526857
C: 303-359-5156, O: 720-577-4103
Troy.williams@northpointe.com
https://financemyadu.com/

Architect

Will & Annie Martin
C: 303-921-5558
will@studiobvio.com
studiobvio.com

_____________________________________________________________________________________________________________________

Part 1: How to find a property zoned for an ADU in DENVER

Navigating Denver zoning code and understanding how to identify ADU properties takes an expert. If you have a passion for this type of thing you can figure it out. The first step is to understand the general areas and neighborhoods where the zoning accommodates building an ADU.

Where to look:

Currently, only about 15% of Denver is zoned for ADUs. Neighborhoods, where ADU zoning is commonly found, including Berkeley, Sunnyside, West Colfax, Barnum, Whittier, Cole, Clayton, Platte Park, Overland, Baker, and Cap Hill.

A big zoning change is in the works and in the next iteration of our zoning code many more areas will have ADU zoning. It will take probably about 5 to 10 years for the zoning decisions to be finalized so don’t hold your breath waiting.

Accessory Dwelling Search

Understanding the zoning code:

We’re about to get really technical regarding the Denver zoning code. Any citizen can find the entire 1300 page zoning document online. Here is a link to the Denver Zoning Code. The people most well-versed in the zoning code are trained architects.

We recommend: StudioBvio

The simplest way to start understanding the zoning code is by learning the basics.

When evaluating a property you will need to know the lot size and zoning code found on most listings or on the City’s Assessor’s website

There are 28 different zoning codes that allow this type of building structure. Within each zoning code, there is a minimum lot size which is going to exclude some smaller lots in the neighborhood. The lot will accommodate an ADU if it has the zoning code and lots size in the list below.

Once you verify that the property is in fact zoned correctly and has a big enough lot there are a few properties that are more ideal for an ADU than others.

Ideal ADU lots:

1. Homes on corner lights are ideal for ADU use to access an avenue rather than an alley.

2. Lots without garage are preferred to avoid the expense of demolishing an old garage.

3. You’re lot size and zoning code will determine the size of ADU you can put on your property. Bigger lots accommodate bigger ADUs. So if I was looking for property to build ab ADU I would only purchase something with a large lot. Denver ADUs come in three sizes: 650 sq ft, 864 sq ft, and 1000 sq ft. Fixed costs are equal no matter the size, so a larger ADU is a much better value.

Project Guide for Detached Swelling Units

The Project Guide for ADUs is intended to provide you an overview of the permitting process for detached accessory dwelling units (ADUs) such as a guest house that is detached from the primary residence and contains provisions for sleeping, cooking, and sanitation.

Help finding an ADU:

The reality is that even a real estate agent can’t filter properties that met the ADU criteria and send you these listing. Because you have to run the code and the lot size for thousands of different properties it is nearly impossible on the current MLS system that real estate agents use. On my website, I have an area specifically designed to solve this problem.

If you want to buy a property zone for an ADU I highly recommend utilizing a real estate professional who is knowledgeable in this area.

_________________________________

Hiring an Architect

I purchased my home with an ADU zoned lot in March 2017. From day one, I started researching building an ADU. In August 2018 I engaged an architect to complete a feasibility study which was an important first step. By October 2019 after over two years of research, I finally had a deep enough understanding of the complicated Denver ADU regulations to hire an architect.

Aug 2018
Step #1: Feasibility Study
I engaged architect Will Martin, owner of StudiObvio, for a feasibility study to understand what I could build on my lot. This process was foundational for me to understand the basic size and layout of my ADU in the beginning. This gave me a concrete understanding of my end goal and always kept me motivated to push forward. A feasibility study is ideally is done during the buying process so you can make an educated decision when purchasing.

October 2019
Step #2: Interview Architects

Who you choose to build your ADU project is extremely important. There are many different architects with different specializations. I narrowed my search for an architect to only those architects who are experienced in building accessory dwelling units. ADUs come with a whole lot of special architectural considerations including bulk plain requirements, 75% on the second level, and special considerations for the water and sewer. I interviewed three architects before making a final decision.

Will Martin – StudiObvio
I initially talked to Will because he did the awesome feasibility study for me. I didn’t choose to work with Will because his work schedule did not accommodate my ADU design within my timeframe.

Carrie Baron Architect, LLC
I also spoke with an architect Carrie Baron Architect, LLC. She has built several ADUs in Denver and I’ve actually seen many of her designs in-person after construction. Carie is a very lovely person and I feel like she would be great to work with because she’s a great listener and has the right experience with this type of project. Her design fees were affordable.

John Schwarz, SimpleHomes
I eventually decided to use my friends at SimpleHomes to design the ADU. SimpleHomes is owned by David Schultz, the owner of L&D Construction who has led a public education campaign for Denver homeowners to understand this complex building form. They have built 30+ ADUs in Denver and are well-versed with ADU Construction and design. I decided to use Simple Homes to design the ADU because the technology they use during the design process is integrated into the programs necessary for the structure to be built in a factory efficiently. SimpleHomes architect John Schwarz designs the building plans in 3D for visualization of scale, material, and colors. Once finalized, the design can be plugged into their system to program the design in the factory to build it exactly to your plan in the factory just north of downtown Denver. A big factor in the decision to use SimpleHomes was their wonderful Sales Manager & Broker, Sarah Senderhauf who provided counsel for many years and helped me understand the ADU building process.

Paul Minor, Blackstone Architecture, Inc.
Hindsight is always 20/20 and it is worth mentioning here that I really regret not picking an architect based on their building style. I wanted a traditional look with elements of the very popular farmhouse style. My architect and I had very different styles and that became a problem during the design process. Make sure to read my next blog chronicling the design process with SimpleHomes that includes a review of my experience and the lessons I learned. I took a photo of a home Paul designed and I kept trying to get my architect to recreate that style. I ended up going back to the home many times and eventually ran into the owner and he told me the architects name. I highly recommend vetting your architect’s style first and foremost

_______________________________________________________________________________

2700 Jackson Street ADU Has Broken Ground.

Appraisal, Financing & Construction update.

Background

In March 2017 I purchased my first home for $315K, it was zoned for an ADU. The small 2 bed, 1 bath 800 sf brick structure required a full remodel and had an additional 800 sf unfinished basement. Before I moved in, I remodeled the main level, investing $60K. In summer 2018 I spent $40K to finish the basement – adding a master suite making the home 3 bed, 2 baths. The improvements were part of a thoughtful plan to add equity to my home in order to finance a future ADU (accessory dwelling unit). In January 2020 I engaged an architect to design the ADU and we submitted to the City of Denver mid-2020 for a permit. In December 2020 the city approved our permit and I began working with a lender to finance the project.

Construction Loan for an ADU

Before you contact a lender, you need to have your architectural plans completed, approval of the permit from the city, and select the builder you plan to work with. The builder will use the plans from your architect to come up with a detailed bid – the bid and plans must be in place to get a construction loan. The construction bid to build my ADU is $360K FirstBank is well known in the Denver community for construction loans and I went with them based on a recommendation from my builder and knowing their good reputation. I loved working with Megan MacHatton, she was excellent!! Luckily with my income, I was fortunate enough to qualify for a construction loan. When I initially purchased the home in 2017 my mom had to co-sign with me. She needed taxes for the last two years, bank statements, etc. I had to up my insurance to cover the construction project in my backyard. We talked numbers, but nothing could be determined until we had an appraisal done.

Appraisal

Appraising an ADU presents many challenges. ADUs are very uncommon in the Denver market because the concept started in 2010. Of the 200 ADUs built, most owners keep them and therefore true market value is not well established. In my appraisal, they had one good comp that sold for $806K with an ADU and he used another sale 6 miles SW in Overland for $925K with an ADU. He also considered one property with a basement ADU that sold for $750K. Lastly, he used two properties similar to the existing main house without ADUs that had sold for $538K and $549K and adjusted them $240K to account for the ADU. The appraised value ended up at $770,000 for the main house plus the ADU. Unfortunately, this is not good because I know that the main house is worth at least $540K and I’m planning to spend $360K building the new ADU. Ideally, the appraisal would be at least $900K (value of the main house + cost of constructing the ADU). Luckily, I was prepared for the low appraisal as it is commonplace with ADUs.

Financing

FirstBank will give you a construction loan for 80% of the appraised value – so my loan is for $616K (80% of $770K appraised value). They carried the loan for the entire property, so they paid off and took over the $271K loan on the primary house plus the $360K loan for construction of the ADU. It’s a $616K interest only, one year loan with a balloon payment due after 12 months. My interest rate is 4%. My payments start at $945/m and as the builder takes draws on the loan, the monthly payment will max out at $1890/m. I currently rent the main house for $2300/m so the mortgage is sufficiently covered during construction. Because the appraisal came in low, I had to bring a $23K down payment to closing and my closing costs were $5K. We estimate construction to take 6 months. After construction, I plan to refinance the home into a traditional 30-year mortgage at a lower interest rate and I’m crossing my fingers that after completion I can get a better appraisal at that time.