Maximizing Your Property’s Value with an ADU in Hawaii – Complete Guide

Homeowners today are looking for ways to maximize the use of their property. One way to do this is by investing in an accessory dwelling unit (ADU), also known as an in-law suite, which is a secondary home built on the same property as the main dwelling unit. Accessory dwelling units in Hawaii have been gaining popularity since their introduction in 2015. Considering the housing shortages in Hawaii, ADUs are beneficial because they address this need while also offering financial gain for property owners through rent income and increased property value.

Understanding ADUs in Hawaii

The minimum Hawaii ADU requirements are that it has a full kitchen with an oven, a bathroom, a bedroom, and a parking spot. ADUs used to house family members are known as an Ohana unit. The major difference between an ADU and an Ohana unit is the kitchen. An Ohana unit can only have a wet bar, which is essentially a kitchen without a full oven. It can also only be rented out to family members.

There are three main types of ADUs: interior, attached, and detached.

Interior ADU

An interior ADU is part of the main dwelling unit. It is formed by renovating parts of the house, such as the lanai, one of the floors, or an attached garage to house the unit. In other words, in this type of unit, the ADU is enclosed within the main house.

Attached ADU

An attached ADU is similar to an interior ADU in that there is a connection to the main house. The difference is that rather than building it within the existing house, it is built as a whole new building and then connected to the main dwelling unit.

Detached ADU

A detached ADU, like an attached ADU, is a separate building. Where they differ is that the detached ADU exists separately on the property without any connection to the main dwelling unit. A separate structure on the property, such as a shed or detached garage, can also be converted into a detached ADU.

Why build an ADU on your property?

Homeowners with an ADU on their property can enjoy an additional source of income via rent and increased property value. How much value does an ADU add? That depends on the ADU type, size, and location.

An ADU also adds to the neighbourhood’s diversity by creating housing for those who would not be able to live there due to pricing or housing availability. They also offer housing options to those who want to live in a smaller, more sustainable home. ADUs can also be great for housing older family members who would still like to maintain independence.

ADUs as a Solution for Affordable Housing in Hawaii

Hawaii is in a state of crisis when it comes to housing. The demand for housing clashes with supply and space limitations, making the cost of living high. ADUs are an ideal solution to tackle the problem.

They’re constructed on existing property, meaning there’s less pressure to expand city limits into more rural areas to meet the demand. They also offer financial benefits for both the homeowner and renter. The owner gets an additional source of income, the renter gets accommodation for a lower rate.

Designing Your ADU for Maximum Value

Once you decide to add an ADU to your property, the next task is to figure out how to enhance its appeal and functionality to attract renters or make it comfortable for family members. The overall consideration for adding an ADU on one’s property should be how well it fits the Hawaiian lifestyle and climate.

Other aspects to think about are:

Functional Design

This means that instead of constructing a basic unit, you need to keep its use in mind during the design phase. The use determines the design and not the other way around. For example, if it is intended to house an elderly family member, you need to make it a space that can be easily accessed and navigated.

Eco-Friendly Features

For many individuals, living sustainably is an important priority when selecting a home. Having a smaller home is one way they accomplish this because a smaller space requires less energy to heat and cool. Other eco-friendly features to consider include energy-efficient appliances, solar panels, and recycled or eco-friendly building materials and finishes such as bamboo, recycled steel, and low-VOC paint.

Permitting Process

To be able to build your ADU, some paperwork needs to be completed along with the necessary fees. The state’s Department of Planning and Permitting outlines the process clearly, starting with the online Internet Building Permit (IBP) application and ending with the issuance of the building permit. The state also allows you to get an as-built permit Hawaii for structures that were previously constructed without a building permit.

Rental Market Trends

Another way to make the ADU on your property more appealing is to explore ideas from rental market trends for sustainability, design, or aesthetic choices. To make it easier to choose the right ideas, it is important to keep the ADU’s function in mind and search for ideas with those parameters.

Insurance Consideration

Does an ADU increase property value? Absolutely. However, keep in mind that as the property owner, you will need to insure the ADU along with your main dwelling unit. This will increase your insurance premiums, so it is an important factor to consider if you’re thinking of building an ADU. The cost of insurance will vary depending on the type of ADU you have.

Long-Term Investment

Adding an ADU on your property has upfront costs for the permit application, construction, etc. that add up. However, view the ADU as an investment that will pay off long-term in passive income and increased property value. That said, long-term commitments like insurance and taxes need to be considered along with the fact that having an ADU means that you are required to live on the premises.

Rules & Regulations for ADU in Hawaii / ADU BASIC REQUIREMENTS

Some basic Hawaii ADU requirements to keep in mind are:

• Your property must fall within specific lot zone categories and be at least 3,500 square feet.
• Only one complete dwelling on the property before the addition of the ADU is allowed. Therefore, properties with apartments and duplexes cannot have an ADU added.
• The ADU must have a parking spot and a driveway that accesses the main road.
• You or your family member must live on the property, either in the main dwelling unit or in the ADU.

Additional Hawaii ADU requirements can be found through the Honolulu Department of Planning and Permitting.

Next Steps for ADU Service

An ADU is a great investment whether you are looking for ways to increase your passive income or want to better accommodate family members. Tal Builders is experienced with the ADU construction process – from design and permit application to the final construction. Our vast portfolio and experienced team prove why we are the professionals you should trust to build your dream ADU on your property.

Get your free estimate today!