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Friday, Sep 29, 2023

ADUs on the Rise

Inflation and rising costs of living appear to be here to stay. According to a June 10 report by the Bureau of Labor and Statistics, inflation accelerated even further in May, with prices rising 8.6% from a year ago, marking the fastest increase since December 1981.

The demand for rental properties and accessory dwelling units has also grown as people seek an additional income stream and an alternative to purchasing a home on a new piece of property, according to Or Michaelo, chief executive of Orbit Homes. He runs the Malibu-based company with his older brother, Joseph Michaelo.

Orbit Homes creates high-end ADUs, and the Michaelo brothers said their products are seeing high demand thanks to factors including the aftermath of the 2018 Woolsey fire, the pandemic and the threat of an economic slowdown.
“People who lost their job and lost their stability have turned into landlords,” Joseph Nichaelo said.

The Michaelo brothers started their company in 2019. The formation of Orbit Homes followed years of experience creating modular and manufactured homes
“It came from a long time working construction,” Or Michaelo said.

He added that Orbit has streamlined the process of building an ADU on one’s property, including making sure that all setback requirements, which dictate how far a structure must be situted from property lines, are adhered to.

“You have the main residence already. If they have more land, the setbacks allow you to bring in X amount of space, then you can get the permits to install the ADU,” Or Michaelo said. “When you own a residence, you can get a loan against the residence for installing the ADU.”

Ranging from $350,000 to $625,000, Orbit models come in different styles and are branded after the cosmos, with names including “Sun,” “Moon,” “Comet,” Nova” and “Jupiter.”

“We have many different models and floor plans according to the setbacks; you can have 400 square feet all the way to 1,200 square feet,” Or Michaelo said. “After we know what the setback is, then the process is to get to know the type of financing they’re going to have.”

Orbit offers 15 different floor plans for the 16-foot-tall ADUs ranging from one-bedroom abodes to models with two bedrooms and two baths. An expediter works with clients to gather all of the information necessary to build an ADU, such as how far it will stand from the property line and from the main residence, and procures the required permits.
“We have expediters for every area – different expediters are experienced in different counties,” Or Michaelo said.

“The house is already preapproved by HUD, under the fire codes, earthquake codes,” he addes. “We took the HUD code and made higher-end houses.”
Orbit Homes also takes care of the ADU’s interior with a furniture line the company created to furnish the homes.

“During the pandemic, we served the Malibu community,” Or Michaelo said. “Only recently, we opened our doors to expanding out of Malibu because we were so busy with that.”
And that may be a positive for millennials purchasing ADUs as a way of boosting their income.

“They’re really worried about creating another revenue,” he said. “They want to get a house on their property that will generate $2,000 to $5,000 a month, depending where they are.”
Small ADUs can be constructed in 10 days, while the larger units take three weeks.
Out of a Riverside factory, 250 people work on each house, which has its own set of axles and wheels to allow it to be transported by truck.

“The house is fully built and inspected already,” Or Michaelo said. “It’s very easy to build. All the electrical is there, all the plumbing is there, the solar.”
The wood-framed ADUs come in one or two pieces, or three or four pieces for the larger dwellings.

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