A California couple built a $500,000 ADU in their parents' backyard when they couldn't afford to buy a traditional house

• Aislyn and Ali Benjamin asked their wedding guests to gift money toward their first home.

• They used the money to build an accessory dwelling unit, or ADU, in the groom's parents' backyard.

• As buying a traditional home remains expensive, some Americans are turning to ADUs.

Newlyweds Aislyn and Ali Benjamin felt they couldn't afford to buy a traditional property in their corner of California, in the small city of Danville, just over an hour's drive east of San Francisco.

The median sales price in Danville is about $2 million, according to Realtor.com.

They weren't interested in renting an apartment long term, so they opted for a more affordable option: an accessory dwelling unit, or ADU.

They now live in a 1,200-square-foot, three-bedroom, two-bathroom ADU in San Ramon, a city next to Danville. Financing and building the ADU cost a total of $500,000, paid by the couple with help from their parents.

"This was the best decision we ever made," Ali Benjamin said. "It allowed us to save so much money and live where we wanted."

In recent years, ADUs have become an increasingly popular alternative to traditional apartments or houses. Homeowners may build them on their properties to generate extra income and reduce debt or to provide housing for adult children or aging parents who want independence but need extra support.

First-time homeowners like the Benjamins are also turning to them as an alternative during a period of high home prices, relatively expensive mortgage rates, and an overall lack of starter homes.

For the Benjamins, who run small businesses in San Ramon — Aislyn, 30, coowns the cheerleading gym Norcal Elite, while Ali, 34, manages Benjamin's Boxing — building an ADU made the most financial sense.

"The main reason we chose to do this is to stay close to our work," Ali Benjamin told Business Insider. "The area where we work in San Ramon is pretty expensive, and we wanted to live somewhere without a commute, with good schools and a strong community, where we could eventually start a family."

The lowdown on ADUs

ADUs are smaller housing units that typically range from 150 to 1,200 square feet, depending on the location. The average cost to build an ADU generally falls between $100,000 and $300,000. Additional expenses may include site preparation, such as inspections and utility installations, and permitting fees.

Indeed, more ADUs are being built throughout the US.

In 2018, ADUs accounted for just 8% of permits and 5% of completions in California. By 2022, however, they comprised 18% of total permits and total production, an April report from the Urban Institute said.

The process of building the Benjamins' ADU

For their 2022 wedding, the Benjamins asked for money toward the ADU instead of traditional gifts and raised $5,5450 through a GoFundMe campaign toward their $10,000 goal.

After consulting with several builders, the couple ultimately chose to work with Villa, an ADU builder operating in Los Angeles, San Jose, and other Bay Area cities that came recommended by a family friend.

Villa offers units ranging from 440-square-foot studios to 1,200-square-foot three-bedrooms, priced between $95,000 and $180,000 — not including installation and additional costs. The company handles the permitting, building, and installation of the ADUs for its customers.

In California, where most backyard homes are built, permits can cost anywhere from $450 to $15,000, according to Backyard Unlimited, a company that builds ADUs.

In October 2022, the Benjamins began designing their ADU.

By March 2023, they had removed a pool from his parents' backyard to create space for the ADU, which was delivered three months later. Construction was completed by September 2023, when they moved into the home.

To finance the ADU, the couple made a down payment of $100,000, while Ali Benjamin's parents took out a $150,000 retirement loan and a $200,000 HELOC on their main home to help them. The remaining $50,000 was allocated for add-ons, including concrete work, which the Benjamins financed throughout the process.

Even though California offers grants of up to $40,000 to residents building ADUs, the Benjamins didn't receive any money for their project.

The couple intends to remodel the main home in the coming years. When they start a family, they plan to switch living arrangements, moving into the main house while their parents occupy the ADU.

"My parents are definitely excited to be close to their son and daughter-in-law and to have the opportunity for us to become an even closer-knit family," Ali Benjamin said.

The Benjamins find ADU living surprisingly luxurious

They went from living in a two-bedroom, two-bathroom apartment that cost them $3,086 a month in rent to a whole home for $2,900 monthly, including utilities. The payment goes toward a 15-year mortgage on the property.

Their ADU's kitchen has quartz countertops and an island, with skylights throughout the family room, kitchen, and bathroom. They also added a deck and a long driveway leading up to it, complete with an electric gate for added privacy.

"I think the biggest misconception we got when I told people we were getting an ADU is that they imagined it as a tiny shack in someone's backyard," Ali Benjamin said. "In reality, there are homes that are much smaller than our ADU."

Read the original article on Business Insider