A secondary dwelling with your single family residence
Approved in September of 2016, the State of California adopted Assembly Bill 2299 and Senate Bill 1069 to deal with the California housing shortage crisis. These bills allow for a secondary dwelling to be constructed on the same parcel as your single family residence. It is not considered a separate unit because it does not have separate utility connections/accounts. It can have a full kitchen and can be up to half the size of the principle residence but not more than 1200 square feet. Local municipalities have varying ways of implementing the legislation.
Regarding feasibility, the monthly loan costs to build an Accessory Dwelling Unit can be about half of the rental income that it returns. Therefore, building a rental Granny Flat can ultimately reduce your out-of-pocket mortgage costs. In general, there are three ways of adding an ADU to your property.
Detached new structure
The ability to place a completely separate structure on your parcel greatly depends on a number of factors. These include the size of the lot, the location on the lot of the principle residence, and the setback requirements that the local municipality adopted. If the existing conditions are right, then there are two very different methods for building the structure. One is to utilize traditional wood frame construction on a concrete slab, and the other is to assemble a manufactured home on concrete footings. The manufactured home costs about half the amount of a custom one, and can be treated with design features that can make it hip instead of ho-hum. It requires there be sufficient width access to the building site, and is much faster to construct. A custom wood frame structure may be the only option though depending on the site conditions.
Conversion of and addition to an existing detached garage
Depending on your local municipality's parking requirements in this regard, an existing detached garage in your back yard can be converted into a Granny Flat. Because a typical two-car garage is about 400 square feet, you can build an addition to the garage in order to capture more living space. ADU setbacks will apply to the new wood frame construction. There can be some cost savings in this scenario because there is already existing square footage and more likely than not there is also already power. A new sub-panel is added and the plumbing connections are made by trenching to the nearest sewer clean-out and water supply. In many cases, the dwelling can also go on top of the garage, which reduces the ground floor footprint. This can be key for properties that are not very big. This project type can be accommodated by the 203k Standard loan program, but may be limited by the 6 month construction time limit if the municipality is slow in issuing permits.
attached to the principle residence
Depending on the configuration of your parcel, it may be that the only way to build an Accessory Dwelling Unit is to have it attached to the principle residence. It does not need to have access to it from inside though. In some cases, a family may choose to have an interior door connection if the dwelling is to be used by a family member who desires independence but also wants to be part of the family. Of course, that will depend on which room the addition branches from. If you're looking to utilize the 203k Standard loan program and there is not an existing detached garage, then this is your solution. Recall, the 203k loan doesn't support new detached structures, but it does support additions. Just like the other scenarios, this ADU can have it's own full kitchen. As mentioned in the garage-conversion section above, the feasibility of this approach may be limited by the 6 month construction time limit if the municipality is slow in issuing permits. This approach also allows some or all of the ADU square footage to be from the existing primary residence (portioned off).