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Small House

Vashon ADU's

The ABCs and 123s of ADUs: Building Affordable Workforce Housing On Vashon Maury Island

The ABC's and 123's of ADU's

WHY ADU'S?

Why ADU's

Many homeowners choose to have an ADU on their property.  Why should YOU?

  • Generate passive income through renting

  • Create an in-law unit for family members or friends

  • Create private space for a home office or workshop

  • Increase property value

    How can YOU use an ADU to help the Vashon community? 
     

  • Contribute to affordable housing options in our community for teachers, fire fighters, store clerks, etc.

  • Reduce urban sprawl and off-island ferry commuters by creating affordable rental options on-island

  • Increase useful space in homes by renovating existing, underused spaces such as an attic, basement, or garage

How to Use this Document

This document is to be used as a general reference for people on Vashon Maury Island who are interested in helping provide affordable housing for members of the workforce that have been priced out of housing they can afford.  There is a lack of long-term rental housing inventory.  The amount of housing used for short term rentals has had an impact on that inventory.

area of focus

We are focusing on creating Accessory Dwelling Units (ADUs) that are located in the town core.  Access to both sewer and water provided by Water District 19 is an economic and permitting advantage in creating an ADU. (See Map of Vashon Town Sewer and Water Districts in the Resources at the end of this document.)

Who lives on vashon?

The Vashon Maury workforce includes individuals and families who have modest to moderate incomes and cannot afford to enter the home ownership market.  The community depends upon providers in the hospitality, service, healthcare and retail sectors, as well as teachers and firefighters.  These workers, and many others, make up our workforce.

adu types covered

We are also focusing on ADUs that are additions or interior remodels or conversions of existing outbuildings. These are the least expensive options.   We will not be focusing on detached ADU’s  (ie, new, stand alone structures) because of the higher construction cost and lower affordability.

Thanks to Housing Solutions Network (HSN) in Port Townsend
for sharing their research and documents: 
https://housingsolutionsnetwork.org/

The ABCs: Basics about ADUs

The ABC's

This page provides an introductory overview to building ADU's on Vashon Island. Topics include:

What is an ADU?

ADU Advantages and and Drawbacks

ADU Design Options, Costs and Permitting

House with Chimney

Financing an ADU

Creating an Affordable Rental ADU

Landlord Considerations

The 123’s: Steps for creating an ADU

A) What is an ADU?
House with a Backyard

A) What is an ADU?

An Accessory Dwelling Unit or ADU is a self-contained living unit that exists on the same property as a single-family residence and is usually smaller than the residence. "Self-contained" means the unit includes both bathroom and kitchen facilities as well as sleeping and eating areas.

B) Advantages and Disadvantages

(B)  ADU Advantages and Disadvantages

PROS & CONS

SOURCE OF RENTAL INCOME

IMPACT ON PRIVACY

HOUSING FOR CAREGIVER OR FAMILY MEMBER

HOMEOWNER AS LANDLORD (WITH RESPONSIBILITIES)

INCREASED PROPERTY VALUE

POTENTIAL IMPACT TO PROPERTY TAXES

Blueprint

(C) ADU Design Options, Cost, and Permitting

C) ADU Design Options, Cost, and Permitting

Accessory dwelling units (adu's) come in many forms

ADUs that are Additions, Remodels, or Conversions


If an existing inside space is being remodeled or adapted to an ADU, the cost will be influenced by the condition of the existing structure and the degree to which it conforms to current building codes. As exterior modifications or expansions are added to a primary residence, the costs will increase. The homeowner may need to engage an architect, designer, or builder for advice on their specific project. There are no pre-approved plans for additions or remodels.

 

​Conversions include renovating existing detached structures such as a garage, shed or other outbuilding into an ADU. Since each conversion is unique, it is hard to provide general information. Older buildings may require upgrades to meet current building codes.

 

Permitting: King County Requirements

*NOTE: King County is in the process of amending / changing some of the existing requirements. Refer to King County's “Residential Accessory Dwelling Units” document for current information.

Some requirements include:

  • Property to have only one accessory dwelling per primary single detached dwelling.

  • Lot size must be three thousand two hundred square feet or greater. 

  • The unit shall not exceed 1,000 square feet of heated floor area and 1,000 square feet of unheated floor area (with some exceptions).

 

There are many other requirements summarized in the King County Accessory Dwelling Unit document regarding setbacks and lot coverage and building code, as well the application process and a helpful checklist.

(D) Financing an ADU

D) Financing an ADU

The ability to finance an ADU is often a determining factor in moving forward with a project. Conventional home mortgage products have not always been inclusive of ADU projects, however these restrictions are loosening and it is becoming more common for ADUs to be considered as part of the larger primary residence construction or as a stand alone project. However, recent regulatory changes now allow future rental income to be considered in certain conventional lending options. Be sure to consult a loan officer for more details.

 

FINANCING OPTIONS


Self-financing

A place to start is for the homeowner to examine their liquid assets (savings, market investments, etc.) to determine if they have adequate resources to pay for part or all of the project. The remaining options covered in this section are for homeowners who are not able to self-finance the entire project or opt not to do so.

 

Refinancing

Homeowners who have owned their residences for three, five or more years may have developed sufficient equity that they can refinance at a higher level of borrowing and use the resulting cash to fund the creation of their ADU. With the recent increase in mortgage interest rates, this option is not as attractive as a few years ago.


Refinancing of mortgages result in a lump sum loan made available at one time to finance the ADU project and construction as it moves forward. Monthly payments for the refinanced mortgage begin when the funds are made available to the homeowner.

Home Equity Loans

Homeowners who have built up considerable equity in their homes but who have limited liquid assets could consider using a home equity loan to finance their ADU. As with first mortgages or refinances of first mortgages, home equity loans provide a lump sum payment and loan repayments commence when the loan Is made.


Whether it is preferable to take out a home equity loan or refinance their first mortgage would depend on prevailing interest rates, fees, and available durations of these different products. Home Equity Loans have fixed rates of interest. Home Equity Loans and HELOCs (below) usually have shorter allowable loan durations than first mortgages.

Home Equity Line of Credit (HELOC)

As with home equity loans, this product is available to homeowners who have built up adequate equity in their primary residence. As the name implies, a HELOC establishes a line of credit with a lending institution against which the borrower can withdraw cash as needed, rather than all at once as with Home Equity Loan. This can be helpful for an ADU project where expenditures may be spread over many months. HELOCs usually require interest only payments for a period, say 5 or 10 years, and have variable interest rates. At or before the end of this period, the borrower is required to initiate repayments on an amortization schedule with a fixed interest rate.

 

Renovation Loans

Several products are available to finance home renovation, including adding an attached or detached ADU. Fannie Mae, the FHA, and the VA all offer such loans. Terms differ between these products, but they all generally require that the renovations be done by a licensed contractor within a six-month period. They may allow longer repayment times than home equity products. Renovation loans have not been widely used recently due to several factors, including
changing construction costs and prolonged construction windows. However, they remain an attractive option.


Construction Loans

Construction loans are generally short-term loans (a year or less) to finance the construction phase of a primary residence. Multiple draws can be made to provide funds as needed
during the construction phase. Interest rates are usually higher than for a mortgage or home equity type of loan. Construction loans might apply for an attached ADU renovation project but may not be applicable to a detached ADU. One local lender has introduced a bundled construction-mortgage product that relieves the borrower of applying for two separate loans.

Combination of the above

The homeowner might combine two or more of the above options to create their ADU. For example, a homeowner might self-finance part of the project and borrow the
remaining funds. 

 

(E) Creating an Affordable Rental ADU

E) Creating an Affordable Rental ADU

The commonly accepted guideline for affordability is that the monthly cost of housing should not exceed 30% of the household's gross income. For renters, housing costs include rent and utilities. This guideline or "rule" goes back to the 1969 amendment to the 1968 Fair Housing Act. The 30% rule is almost universally used to determine if housing costs are "affordable," even though many of its assumptions are simplistic and broad. It is also generally accepted that households spending over 30% of their gross income on housing are "cost burdened:' and over 50% of their gross income on housing are "severely cost burdened.”

 

EXAMPLES OF AFFORDABLE RENTS


MEASURING AFFORDABILITY

30% of gross pay is the recommended amount that a person should pay for rent and utilities and live comfortably.

 

 

 

 

 

 

 

 

Source: Glassdoor.com, for Seattle area

(F) Landlord Considerations

F) Landlord Considerations

Does it make financial sense for the landlord to provide affordable housing? 

 

Making everything work out financially requires close attention to the design and construction choices that determine the costs for the ADU.

 

EXAMPLES OF MONTHLY LOAN COSTS

Source: Glassdoor.com, for Seattle area

How can landlords find the right people to rent to?
 

Insert here info from Osha on rental agreements that work for both parties

G) The 123's
Construction work planning

(G) The 123’s: Steps for Creating an ADU

Creating an ADU and bringing it to the rental market is a project. The objective of the 123s is to help make that project go smoothly by avoiding wasted resources, unanticipated delays, rework, and frustration.

It is not unusual for the ADU project to take between one and two years from start to finish. Time spent in the early stages of the project to consider options and carefully weigh choices will end up saving time and money later. Correcting for poor choices once construction starts is very costly, while living with a compromised design is frustrating. 

 

Below is a roadmap to help guide the journey. As with any roadmap - think of your vacation trip plan - you may not spend the same amount of time as others at any stop. You will want to tailor the roadmap to your needs. Every project has some "long poles in the tent" - those aspects which seem particularly challenging. Different projects might have different long poles. Yours might be financing, while another person's might be site constraints on their design, and someone else's might be a neighbor who has difficulty accepting change.

 

Most of the activities in the roadmap apply to both attached and detached ADUs. An exception might be that a site plan would not be needed for an attached ADU unless it is an addition to the residence. Consider the roadmap as a helpful checklist to plan your project journey. The rest of The 123s will walk through this process map block by block to elaborate on each activity.

Roadmap for Creating a Rental ADU

rental adu roadmap.JPG
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