There are big opportunities in small homes. Accessory Dwelling Units (ADUs), often called “granny flats” or bungalows, built in a factory next to their manufactured home cousins, offer an attractive alternative to units built on-site by a local contractor.
And factory-built home products have come a long way in the decades since mobile homes hit the market. Today, their quality and design often exceed that of site-built homes—and they’re move-in ready in a fraction of the time, at a fraction of the cost.
That’s made them appealing to homeowners wanting additional income, increased property value, or a stylish abode for guests. Just ask the founders of Backyard Bungalows in Carlsbad.
Bill Smith and Chris Gahman founded the company in 2020 as a division of their manufactured home company, Sequoia Homes. Now they’re installing ADUs throughout San Diego, Riverside, San Bernardino and Orange Counties.
To meet demand, they also recently became the first exclusive dealer and project manager for ADU builder Orbit Homes in San Diego, Riverside, and San Bernardino counties.
Underpinning the growth in factory-built ADU popularity, buyers often cite the cost difference between factory-built ADUs and site-built units, and how soon an ADU can be
completed. The cost is surprisingly low. With Backyard Bungalows’ ADUs, buyers avoid the expense of hiring architects, engineers and contractors and dealing with surprise cost overruns. Overall, factory-built ADUs are 25-30% less expensive than site-built units but deliver the same increase in property value.
“We’ll do a complete financial analysis for prospective buyers,” says Gahman. “As an example, the average Carlsbad home price is $500 per square foot. Add a 500-square-foot ADU and you’ve increased the property value by $250,000. In San Diego County, ADUs are often bought for their rental income potential. A retired couple downsizing into an ADU to rent out the main house. A family living in the main house can rent the ADU for additional income.”
The biggest difference in choosing factory-built ADU over site-built is the savings in time and the ease and speed in the process. The streamlined factory-build process gives buyers an exact delivery date upfront. Before ordering the ADU from the factory, Backyard Bungalows will conduct a site review.
Then, the property owner visits the company’s design center to select a model and floor plan, the interior décor, appliances and fixtures.
When the order is received at the factory Backyard Bungalows gets a delivery date. A couple of weeks before delivery their contractor prepares the site and within 30 days after delivery, the ADU is ready to occupy. Often, the entire process is less than six months from start to finish.
“Factory-built ADUs offer a turn-key approach so owners don’t have to piecemeal the whole project,” according to Smith. “We take fear out of the process because everything’s spelled out in the contract—and the price is the price. And since it’s built in a factory, building continues rain or shine.”
ADU buyers also save time hunting for materials by selecting all the design features at
the beginning, such as tiles, appliances and flooring. Manufactured homes today offer all the modern design and décor elements available in site-built homes, such as quartz countertops, farm sinks and skylights. With hundreds of models and a design office in Carlsbad, Backyard Bungalows can tailor floor plans, designs, materials and features that highlight a unique view or property feature.
If you’re thinking about investing in an ADU, call Bill Smith or Chris Gahman early in your exploration for a free consultation and upfront financial analysis (third-party lending options are available).