Last night’s ABCs of ADUs event was a huge success! Thanks to everyone who came out to learn more about ADUs and Tiny Homes, and a special thanks to Will and the Microlife Institute for co-hosting the event with us.
We’ve been working on multiple projects lately that are dependent on Historic Renovation Tax Credits (HTC) to help cover the increased cost of historically compatible renovations. Currently, there is a federal tax credit, and Georgia is one of the states that also offers a state tax credit. Combining state and federal credits becomes a powerful financial tool to help make difficult projects possible. Through our experience with HTC’s over the years – and some recent changes – we’ve developed some thoughts on how the system could be adjusted to work for projects that have different scales and available resources.
There are a lot of reasons to build an ADU, and a lot of reasons to do this sooner than later. There is one time that is less than ideal though- when you don’t have an income.
This may seem obvious, but it matters for folks thinking through Aging in Place strategies. An ADU is a great way to be able to afford to stay in your neighborhood as you consider retirement, offering several options. The first stage could be having supplemental rental income while you stay in your house, helping to defray property taxes and other costs. Later, it offers the chance for you to rent out your main house, while downsizing into your ADU. This allows you to keep a foothold in your community, greatly reducing or eliminating your housing costs, and providing freedom to travel the world.
If you plan to finance your ADU, your bank or mortgage broker will have a much easier time getting the loan approved if you still have an income. Loan appraisers often struggle to properly value a proposed ADU, which means they may significantly undervalue it, or give it no value at all. An undervalued appraisal can easily sink a loan approval.
Getting your ADU financed and constructed before retiring is exceedingly important for folks that don’t have easy access to all the cash necessary to pay for their ADU out of pocket. Food for thought.
I recently had the opportunity to sit down with a young, hopeful person who has decided to run for city council. This candidate has focused on issues of inclusion and equity as cornerstone principles. While I fully support these principles in the abstract, I want to know immediately what specific policies would be rolled out to promote these goals. I treasure these opportunities to change minds and dismantle perceptions and expectations. It also gives me a chance to work through theories bouncing around in my head in real time as well.
Affordable housing is now and will continue to be an exceedingly important and challenging need for cities across the nation, and Atlanta is no exception. More and more people are looking to live closer to where they work, live, learn, and play. We have a very limited amount of land that qualifies as walkable urban, and not even all of that has access to MARTA rail. This scarce resource is rapidly becoming more expensive as a large and growing number of people compete for the limited amount of available housing. The Beltline is sparking further demand, speculation, hope, and price appreciation as single-family homes and commercial properties become more desirable within this hoped-for walkability.
Urban redevelopment is our bread and butter at KWA, and we’ve come to understand that attempting to renovate a building built 50-100 years ago is full of challenges. Zoning requirements based on suburban development – but applied to urban areas as well – place tough restrictions and requirements on land use, parking requirements, and setbacks. Financing small mixed-use projects can be challenging even to those with deep pockets due to unanticipated obstacles. And if you manage to make it through all those hoops, our current building codes throw up a range of additional hurdles. We often see folks manage to overcome a range of challenges only to get bogged down in figuring out how to meet new building code requirements without breaking their budget. As we’ve navigated these obstacles ourselves we’ve developed a clear understanding of what to expect and how to best get through or around a lot of these issues. We recently put together a roadmap to help folks work through the code hurdles for a typical, two-story main street type building. Follow the link below to find the downloadable presentation file.
I had the chance to listen to the Strong Towns podcast about a failed mixed use redevelopment attempt via a 203k loan with Ian Rasmussen. Listening to the story, I felt Ian’s pain. I’ve made a few previous warning comments regarding 203k loans to folks in the Small Builder/Developer Facebook Group. I’m going to take this opportunity to share as much as I can regarding this loan product so folks can make as educated a decision as possible regarding funding source for mixed-use projects.