This guide is brought to you by Truckee Huts™… modern, livable renditions of the high-alpine adventure huts you see while tramping out in the woods. Truckee Huts are designed and built by Robert Wise Construction, one of Truckee’s most established contractors with 30 years experience and dozens of 5-star reviews on Houzz. Give us a call to find out more! 530-277-8303

How to Build an ADU in Truckee… Affordably.

There are 4 different conditions that make ADU’s a smart investment opportunity, the fourth condition is especially keen for long-time Truckee Locals. Have a look:

1) The most common pathway to building an ADU in Truckee, is to create a finished living space above your garage. 2) If you don’t have a garage already on your property, another good idea is to build an ADU garage combo. 3) If you have an unbuilt lot, you may want to consider building an ADU first, live in it for a while, and when you have more money to invest, build yourself a full-sized home later and rent out the ADU to offset your mortgage cost.

The FOURTH pathway is a super opportunity to consider… Building an ADU actually pencils out well if you own your own Truckee home and bought it at a reasonable price. If your kids have long since moved out, now you have a great opportunity to downsize into your own brand new Truckee Hut™, then rent out your main house for extra monthly income. Truckee Huts can help you reduce your living expenses, stress less, and enjoy Truckee more.

Below, we will show you how to reduce your living expenses while adding considerable value to your property (thanks to some outstanding CA ADU housing opportunities just made into law). In many cases you can even generate extra monthly income for yourself, too. By renting your main house, you’ll also help provide much needed workforce housing for Truckee’s community of young families.

Here at Robert Wise Construction, we’ve been building custom ADU’s steadily over the past four years. We know the ropes pretty well. In the next few sections, we’re going to explain exactly:

– what it all costs
– how the downsizing math works
– how to maximize your ADU investment
– recent wonderful CA Senate Bills
– how to permit and build your ADU in Truckee
– why Truckee Huts™ are perfect for you
– and other FAQs

WHAT IT ALL COSTS

First of all, building an ADU in Truckee will cost you in the range of $450-550 sqft, or $340-450k for a 750 sqft unit with Robert Wise Construction. This cost may be higher depending on the architects and contractors you approach, especially if they are two separate entities. Robert Wise Construction is a full service design-build contractor.

Alternatively, Town of Truckee has identified some prefab manufacturers they recommend for our area’s heavy snow load. Many look like more affordable options, but there are many hidden costs involved here to be aware of. At the end of the day, these prefabs will cost the same as a custom designed Truckee Hut™. The hidden costs involved in prefab units are detailed in the FAQs, if you’re interested.

THE DOWNSIZE MATH

Remember, always check with your realtor, lender, contractor, and tax assessor for their latest numbers, as markets change regularly. The formula below represents the logic behind your feasibility calculation. For additional information, we recommend you visit Maxablespace.com in general, and specifically this video, both fantastic guides on building and financing ADUs in the state of California.

OK. Here’s the math behind the Downsizing formula mentioned above: let’s say your current mortgage is $1200/month, and building a 750 sqft ADU in Truckee for a cost of about $400k (plus or minus depending on many factors). If you secured a $400k loan for 30 years at 7%, you will pay $2661 per month to build your ADU (yes, sounds outrageous, we know, but the math can still work). 

If you move into your ADU and rent out your 4 bed / 3 bath main house for $4200 per month, that will cover your original $1200 mortgage and all of your $2661 construction loan, leaving you with $339 income.

Aside from relieving you of monthly loan payments, you’ve increased the equity you have in your home. Older Houses in Truckee sell for apx $700 / sqft, so adding an ADU to your older house adds 750×700 = $525k resale value to your home.  $525k home value – $400k construction loan = $125k home equity added. If you plan to sell your home, you just increased the value of your property substantially (check your local realtor for the latest market opportunities).

That is the math for the most basic ADU scenario, but recent Senate Bills have provided even more opportunities for you to live and thrive in Truckee…. and with more Senate Bills on the way, building an ADU is just getting smarter.

MAXIMIZING YOUR ADU INVESTMENT

It is no secret: the state of California has recently passed a series of Senate Bills in an attempt to solve California’s housing shortage. In effect, these bills are encouraging the construction of smaller, simpler, and more affordable housing to coexist within larger single family neighborhoods. Not only does this allow communities to grow naturally (the old-world European way, where the older folks get to stay living in their neighborhood), it is also a fantastic investment opportunity for you…

….because these CA Bills suddenly transformed your single-family-residential property into FOUR, practically overnight. It’s like a pot of gold at the end of a rainbow. Lucky you! Let’s take a closer look:

First, all California property holders can now have up to one attached ADU, one detached ADU OR one JADU on one single family property, for a total of three revenue sources. So, if you’re looking to maximize your rental income (or selling price), this is a good way to do it.  But don’t stop there.

In addition, last year’s passing of SB9 allows any homeowner to split their lot in half. On each lot, the owner can now build two residences each for a total of four (or a main house, an ADU and JADU on each lot split, but this comes with restrictions). Truckee honors lot splitting in the Development Code chapter 18.95. Properties must be located in a single-family residential zone. It is not applicable to rural residential lots, multifamily lots, or most lots on septic systems. Visit Town of Truckee’s ADU resource and this general SB9 resource for more details.

As of this year, AB976 eliminates the owner-occupancy requirement to lot split and build, which means you can lot split, build a duplex and rent the main house, the adu, and also a duplex on the lot split without having to live on-site. The owner occupancy requirement has been permanently eliminated in California thanks to AB976, though it is up to the jurisdictions to adopt it. Truckee has not adopted this yet.

SB1033 was also just passed this year, though it is also up to jurisdictions to adopt it…. SB1033 allows ADUs to be sold separately from the main houses, essentially acting as a condo property. While Truckee does not allow this yet, it is a great idea for you if you want to maintain a small hut in the mountains and sell your main house to buy another house in warmer weather. Truckee may or may not adopt this resolution in the future. 

Check out this Maxable.com link for the latest 2024 ADU opportunities. If Truckee has not adopted some of these bills yet…. but they might soon.

HOW TO PERMIT AND BUILD YOUR ADU

Now that you’ve decided you want to build an ADU, in light of all the opportunities you have, it’s time to see what it takes to build here in Truckee. Contact us at Robert Wise Construction 530-277-8303 to let us know you’re interested in building an ADU (ask for Caroline). We can go over the following process in more detail with you, and guide you through the process. We have built a number of ADUs around Truckee and are currently developing the Truckee Hut…. A slick +/- 500 sqft ADU (alpine warming-hut inspired) with carport, which is ideal for small or steep lots…. because sometimes your own studio with a great view into the trees, plus a toy shed and a covered spot for your car is all you need.

Step 1: Place the ADU on your Property

After we connect with the Planning Department to find out your site’s building parameters, we will then need to get a site survey (we recommend Matt Webb, about $2k), which shows your site topo, utility connections and setbacks. We need this site survey to place the ADU on your property and submit this site plan to the Town of Truckee with your permit package, and your HOA if you have one. Lots must be free of snow to get site surveys….. so springtime is the right time to start your Truckee Hut adventure.

Step 2: Be aware of Extra Costs

Truckee is a mountain town, and sloped lots are more expensive to build on. If you have to dig your ADU out of a hill, or put it up on sticks overlooking a cliff, this will add to costs and chip into your bottom line. We are currently developing the Truckee Hut for this reason…..  because sloped lots are expensive and keeping the footprint as small as possible is often the way to go. When you develop your plan at Robert Wise Construction and we attempt to place it on your site, we will find out how much extra costs you’re looking at, or that it might not fit at all. But if everything fits…. We will create the construction plans for your site.

Note: Junior ADUs (attached to main house) and ADUs over existing garages should stay within their existing walls. Any structural renovations to these spaces will require code-compliance upgrades for potentially the entire house.

Step 3: Apply for ADU Permit

We will submit both your construction plans and your permit paperwork to the Town for approval. The permit cost is between $1300 and $1800 depending on your square footage. Meanwhile, you can apply for special ADU grants or loans that are offered by the Town of Truckee. When you build an ADU under 750 sq ft in California, you do not have to pay any hefty D&I fees.

Step 4: Build your ADU and Enjoy!

Your permitted ADU can be built by Robert Wise Construction if our schedule is right for you, or by any other local Truckee contractor. Your choice! Construction can take between 3-9 months, depending on who you hire and what their construction pipeline is like. Since the solid majority of contractors are busy with 4000 sqft homes, an ADU will get built when subs can find an extra day between big jobs. However, Robert Wise is a very efficient builder…. If we can line up 3 or 4 ADUs to build in sequence, we can send our crew to build them all at once, quickly just like in an assembly line. Inquire with us first!

Contact us: 530-277-8303

FAQs

Can every Truckee homeowner take advantage of this Plan?

Many can, with some exceptions. Lots eligible for ADU’s must be on city sewer lines, or at least have the lawn space for an additional septic tank. Prosser, Olympic Heights and Sierra Meadows are small lots with septic fields, and in many cases do not have the space to fit an additional septic tank, so these houses are not eligible for the Town of Truckee as of now… unless they approve composting toilets as an alternative (if this applies to you, please call the Nevada County Health Department (530) 582-7884 to express your interest in composting toilet alternatives. Maybe they’ll approve them!) A new, small septic will cost about $3k, which is included in your construction loan.

Why is the cost per sqft so expensive?

Building a very simple adu costs around $400-600/sqft. Not only have sqft prices risen in general since covid, but smaller homes are more expensive per sqft overall because smaller houses have less “cheap” footage (cheap footage is conditioned living areas other than kitchens and bathrooms, which are a significant portion of the budget by themselves). Plus, both large and small homes share the same one-time costs: permitting, utility connections, furnaces and WD units, in addition to kitchens and bathrooms. So, at the end of the day, a 300sqft ADU is just a little less expensive than a 750sqft ADU. But money is money, and available space on the lot is the next biggest factor.

Are there actually ways to finance ADU construction now?

Yes, most are built with home equity loans. Others are built with a construction loan. Check out this ADU Financing video on Maxablespace.com, an excellent ADU resource for the state of California’s ADU program. Additionally, Town of Truckee offers a 30k loan and 15k loan (come with deed restrictions and renter qualifications though), and various grants for JADU conversions. See these loans here. 

Can I bring in a prefab unit or buy online plans instead?

Not really, but with these Truckee-approved exceptions. Truckee is one of the snowiest places on earth, with a roof snow load of up to 425 lbs per square foot (wow!). These snow loads would crush a prefab unit, and online plans would have to be reengineered for snow load and roof pitches may need to be changed for snow shed conditions also. Additionally, Truckee is a mountain town with many sloped lots that need different ADU solutions. For these reasons, your best bet is to purchase a plan set designed and engineered right here in Truckee. Luckily, we have ADU models all ready to go.

What are the hidden costs involved in a Truckee-approved prefab?

Prefab manufacturers typically won’t be involved in excavation and foundation phases, which will add a significant cost of about $60k or more on sloping lots (if they do mention foundation, it’s typically a slab-on-grade which won’t work on a sloped lot.) Also typically not included are utilities trenching and public utility hookups (gas, water, sewage / septic apx $9k). Some may also omit the heating and cooling units in their package price. Most prefab units will be constructed with thin 5″ thick walls (2x4s), which also won’t give you a feeling of sturdy construction, and their roof pitches may not be well-designed for the dangers of snow shed. Finally, with these prefab units, you will also need to hire a General Contractor to handle these extra components prior to receiving/installing the unit, which is a significant cost in itself.

For the same price as a prefab, Truckee Huts™ are built with sturdy 2×6 walls, are custom designed for your sloping lot, are shaped to fit into your particular site setbacks, and the roof pitches are specially considered for safe show-shed. We also include all the design and permitting, and all the extra costs of excavation, foundation, heating and utilities… which makes Truckee Huts™ a hassle-free, all-in-one solution provided by one of Truckee’s longest established contractors, Robert Wise Construction. Give us a call 530-277-8303.

Does building an ADU increase my Tax Liability?

Good question. Yes, but your main house will not be reassessed. You only pay the additional tax associated with the ADU (and JADU). If you’re looking to use your home equity line and also reassess the value of your home to get a higher loan amount, you will likely pay more taxes (check with your lender).

How much does it cost to start?

Getting a set of ADU construction plans from Robert Wise Construction is $6k, your site survey is $2k, and your associated Truckee permits are between $1300 and $1800 depending on your square footage. In most cases, all these costs can be absorbed into your construction loan, though payment upfront for the design and site survey costs ($8k) will be asked. Building an ADU in Truckee just might be in your future! Start by giving us a call.

Caroline Lee
Designer / Project Manager
Robert Wise Construction
480-808-1141 cell