Converting a Two-Car Garage Into a Granny Flat in Los Angeles

Ever park your car in your garage and think...I could be renting out this space instead? You could. 

Converting garages into studio or one-bedroom apartments is one of the hottest trends in home improvement in Los Angeles right now. Not only would you be helping out in California’s historic housing crunch, but you could also make money off your investment. It’s a win-win.

So, how do you convert your garage into a granny flat?

What is a granny flat in Los Angeles?

Think of a granny flat as an apartment. Granny flats are usually constructed by converting an attached or detached garage, a large shed, basement or attic into a stand alone apartment, complete with a bathroom and kitchen. Also known as accessory dwelling units (hence, ADU), these structures are usually about 250 to 1200 square feet. Whether attached or detached, these granny flats must exist on single family homes, and have their own entrance, kitchen, bathroom and living space.

In Los Angeles, you can actually construct two granny flats on your property legally. If you have a two-car garage you could potentially construct one granny flat (also known as accessory dwelling unit, or ADU) and one junior ADU (a granny flat that is 500 square feet). That way you get twice the rent potential. 

How do I convert my two-car garage into a granny flat in Los Angeles?

When considering how to convert your two-car garage into a granny flat in Los Angeles, there are some things to consider. 

• Above or ground level: Do you want to convert the inside of your current garage into a granny flat, or do you want to build the granny flat on top of your garage? Technically, you can build a granny flat above your garage. It will cost more than a traditional garage conversion, but you’ll still have the use of your garage.

• To keep the garage or not: Do you really need to use all that space in your garage? You may want to consider converting part of the garage and using the rest of the space for your own storage. 

• Consider the structure: Most two-car garages are attached to the main home. You want to consider what kind of shape your garage is in. Are there cracks in the foundation? Are there footings? Is any of the wood rotting inside? Any of those issues would have to be addressed before converting your garage. 

• What’s not on the inside: When converting your garage into a granny flat, there are many things that need to be installed to make the place liveable. For instance, your garage is probably not plumbed for a kitchen and a bathroom. It could be that portions of your foundation may need to be torn out in order to add that plumbing. You also will be adding electrical wiring throughout, a heating and cooling system (typically called a mini-split), insulation, and drywall. 

• Design: Another thing to consider is the aesthetics. You don’t want your garage conversion to look like a garage. Work with an architect or designer who has experience in converting garages into granny flats to make sure you incorporate plenty of natural light and open planning to create a living space that feels like an apartment, not a garage. 

How much can I charge to rent my granny flat in Los Angeles?

The average rent for a granny flat is about $1700 in Los Angeles. After monthly expenses, including utility fees and upkeep costs, you can expect to net about $860 from your rental. However, how much you charge will depend on a few factors:

• Location: Check out the rentals in your area, especially one-bedroom and studio apartments. This will give you an idea of how much you can charge for your granny flat.

• Size: How big is your granny flat? If you have a single-car garage, that will rent for less than a two-car garage. 

• Attached or Detached?: Another thing to consider in pricing out your ADU is whether your garage is attached or detached.

While you may want to reference the rental prices in your neighborhood, you can also talk to a real estate agent about how much you can charge for your granny flat. Overall, you will be making money off this investment every month.

Will my Granny Flat in Los Angeles be under rent control?

The simple answer is...no. Your granny flat will not be eligible for rent control for at least 15 years after you build it.

Some homeowners decide to live in their granny flat and rent out their main house. In that case, if your main residence was built before 1978, it does qualify for rent control. That means, you can only raise the rent 5 percent per year, plus the local rate of inflation. 

The cities of Los Angeles, Santa Monica, West Hollywood, Inglewood, and Beverly Hills currently have their own rent control laws. It’s a good idea to check with the city or a real estate professional to better understand what rent control regulations your residence would fall under. 

How much will it cost to convert my two-car garage into a granny flat in Los Angeles?

Building a granny flat costs between $80,000 to $120,000 depending on the amount of construction involved. If you are thinking of building your granny flat above your garage, your total price tag will be closer to $120,000 or even more, That’s because you will need to hire additional structural engineers to design the granny flat. 

While this price tag may take your breath away, just remember that most homeowners are able recoup the cost of construction with the extra income they will collect in rent. Also, there are ways to pay for your new ADU without breaking the bank.

Home Equity Line of Credit

Every month you pay your mortgage. You can use that to your advantage. If you currently have equity in your home, you can qualify for a Home Equity Line of Credit, or HELOC. This is one of the most common ways homeowners finance their granny flat garage conversion. 

Cash-Out Refinancing

Another way to pay for your ADU is through what’s called a cash-out refinancing of your mortgage. With a cash-out refinancing of your mortgage, you will get a lump sum payment. How? 

Basically, you replace your current home mortgage with a new one. This new home mortgage would be higher than your current home mortgage. Then, you can take out the extra money and use it towards your ADU. With interest rates at historic lows, this would be a great option. 

Construction Loan

Yet another option is a construction loan. With a construction loan, you would refinance with a mortgage that reflects the house's estimated value after you construct your ADU. Many lenders provide mortgages that cover up to 80% or 85% of the remodeled home's value.

If you want to convert your garage and need help funding your project, give us a call. Our lending professionals have the experience and know-how to get you into a granny flat/ADU/garage conversion today! Call at the experts at Granny Flats Design at 818-532-0482.