This essay as told is based on a conversation with Blanca Barragan, a 42-year-old electrician, who completed construction of a secondary suite she built in her front yard and moved into in April. The essay has been edited for length and clarity.
I bought my house in Sacramento seven years ago for $150,000; it’s small, 583 square feet. Even back then, there weren’t many in the city at such a low price.
At the time, almost every house in my neighborhood was abandoned and there were many empty lots. When I bought my house, it looked like it was falling apart; everyone told me that I shouldn’t buy it and instead wait until I could buy something in a better area.
Things have changed a lot since then. They renovated all the houses in my neighborhood and built houses on empty lots.
I renovated my house with the help of Habitat for Humanity and in 2019 I started house hacking.
My house was supposed to have two bedrooms and one bathroom. But I sacrificed my master bedroom and turned it into a separate micro-studio that I now rent out.
I also got really creative and turned the pantry into a room, and another room in my house that was supposed to be an office, into a bedroom. Additionally, I transformed a 120 square foot shed into a micro-studio.
A silhouette of the tiny house Barragan added to his Sacramento property. Courtesy of Blanca Barragan
Over the past four years, I’ve made $55,780 renting out the micro-studios in my home. The money I earned helped me buy my oldest son a $360,000 home that I also co-mortgaged and qualify for a loan to add an ADU to my property.
In April, I moved into the ADU with my youngest son. Living there while renting the main house saves me about $2,200 per month. I plan to use this money to purchase more properties.
The grant approval process was quite simple
I always wanted to buy another house, but I knew I couldn’t afford it. Instead, I decided to expand on my existing property since I had a huge front yard and my house was quite small.
I told all my friends about my dream of building an additional house on my land. One sent me an ad for CalHFA’s ADU grant program, which gives eligible Californians $40,000 to cover the plans, permits and closing costs needed to build an ADU on their property.
In 2022, I began the process of getting approved for the ADU grant from CalHFA, which was pretty straightforward.
The advert that was sent to me explained all the steps to follow and also provided a list of lenders who could work with me. In fact, to benefit from the subsidy, you must simultaneously benefit from a traditional loan for the ADU.
Because I couldn’t find anyone who would finance the ADU separately – those loans were way too expensive for me – I chose to refinance my existing mortgage with Envoy Mortgage.
A vacant lot where the ADU would be built. Courtesy of Blanca Barragan
My lender contacted Anchored Tiny Homes to get a cost breakdown for the project, which was approximately $30,000, including the cost of permits and a plan. They then submitted those numbers along with their closing cost estimates to CalHFA to obtain the grant. I was approved and the $40,000 grant was sent directly to my lender, who approved my new mortgage.
Because property values have continued to increase each year since purchasing my home in 2017, I refinanced my 30-year fixed mortgage several times before starting my ADU project. So now I have 28 years left with a $460,000 loan at a 4.8% mortgage rate that includes my existing home and ADU.
I moved into the ADU – it saves me hundreds of dollars a month
Construction on my ADU began in April 2023, took a year and eight months to complete, and was completed just three weeks ago. It has two bedrooms and a large bathroom.
In total, construction cost $220,000, which was more than expected. I expected the closing costs to be between $5,000 and $6,000, but they ended up being almost $30,000. I believe they were higher because the lender had to supervise the contractor’s work and administer the loan throughout the construction process.
Even though I received the $40,000 grant, I had to borrow the rest of the money from my lender. As a result, my mortgage, including my main house and ADU, increased by $1,500 per month, from $1,200 to $2,700.
Barragan’s fully built ADU. Courtesy of Blanca Barragan.
There are two tenants living in the main property and my son and I have moved into the ADU. (The small shed I previously rented had to be demolished when the ADU was built.)
The master bedroom in the main house – the one I transformed into a micro-studio – rents for $875. I charge the other tenant $1,305 for the rest of the house. Living in the ADU with my son, I only pay $520 on the $2,700 mortgage. The tenants cover the rest.
I love living in my ADU and my son loves it too. Everything is clean, white and brand new, including our dishwasher, washer and dryer.
The ADU inspired me to buy more real estate
With housing currently so expensive in California, homelessness is widespread. There are tents on many streets; it’s very sad.
Everyone is looking for affordable housing, even my family. That’s why I came up with the idea of sacrificing life in a bigger space and moving into a smaller one.
I like knowing that I’m helping people, and if someone in my family needs to move somewhere in an emergency, I have a place for them.
The kitchen at Barragan’s ADU. Courtesy of Blanca Barragan
I didn’t have any extra dollars when I started this project, I just sketched it out and put it on paper. Building this ADU is beautiful to me because I now feel like everything I dream of can happen.
All of this has impacted the lives of my children, my friends, and my neighbors because they all saw this happen out of nothing.
I’ve developed a lot of big dreams because of this: I wrote a 20-page booklet to teach others how to build an ADU, and I’m already thinking about the next property I want to buy.
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