He builds Arizona backyard casitas, and says very few were planned as short-term rentals

Arizona is a little more than nine months into a plan to allow more homeowners to build accessory dwelling units, or ADUs — otherwise known as casitas — on their property.

Under a state law approved last year that went into effect on New Year’s Day, cities with a population of more than 75,000 people are generally required to allow residents to build ADUs. Supporters argue it’s a way to help ease the state’s housing shortage, but critics point out the law does not preclude ADUs from being used as short-term rentals.

Zander Diamont is co-founder of Minimal Living Concepts, which builds ADUs. Diamont joined The Show to talk about what effects the law has had so far.

Full conversation

ZANDER DIAMONT: Honestly, we've had interest in what we've been doing since long before the ADU laws went into effect. We get asked that question all the time, like how much has the ADU laws helped and with interest and buzz and all that stuff. And to be totally honest, prior to the ADU laws, we were already building ADUs and it's not like it was super challenging to get ADUs built in both Phoenix and Scottsdale. There were some nuances and some certain regulations we just had to kind of cater to, but for the most part, we've really always been able to do it.

I think the biggest impact of the ADU legislation for us has just been related to what I alluded to: the buzz, the tailwind around ADUs, and people kind of considering it as an option when maybe it was something that just wasn't even on their radar. I think it went from something that was sort of a fringe thing to do where people would go, “Oh, you're building a guesthouse, like what's that for,” to something that is like really turning into the norm.

And even a lot of the new builders that we come across, and we actually build full-scale homes as well, and we're adding guest houses to our new builds, and a lot of other home builders are adding guest homes because it's just such a practical thing to do with your property. We've all had grandma come stay with us or a friend or you need that office, you need that gym space, so it just offers so much flexibility and it's just such a great way to enhance your existing property.

MARK BRODIE: What are you finding that the people for whom you're building them, are building them for? 

DIAMONT: Well, that first use case that I mentioned has been honestly probably the most common, which is aging parents, you know, parents that are getting older, they want to sell their house. They're going to use the proceeds from their house to build a guest house and put the rest into their retirement account and want to be closer to the family and the grandkids.

So really like in-laws and snowbirds and aging parents has been the most common use case.

BRODIE: So it sounds like in at least some of these cases, these ADUs are sort of having the effect that policymakers were hoping they would have in terms of providing less expensive housing for people, but it also sounds like some builders, some homeowners are, as you say, sort of putting in gyms or offices or other space for their homes, which wouldn't really have that effect. 

So I'm curious how you would say ADUs help deal with the housing crisis, and the shortage of available and affordable housing for people.

DIAMONT: Yeah, I think it's a great question. And so often we are looking for this, in a very politically polarized kind of moment in history, we're all looking for this “be all end all solution” to all of our problems or all of the country's problems.

And the reality is ADUs are not going to fix the housing crisis. They're not gonna fix the affordability crisis. It's just one additional step that we can take that really doesn't have a downside that does help ease the crisis.

And another use case, by the way, speaking to your point though, about why and how people are using these units, is people are also using them for their kids that are coming home from college. And they're like, “hey, instead of having my son go rent and be in whatever part of town where I don't see him and he's spending $3,000 to $4,000 or has roommates or whatever, I'm going to put an ADU and my son's going to use it for the next couple of years so we can save up some dough. And when he's out, I'll use it for other things like a gym or an office.”

So I do think there are actually a lot of use cases that relate back to affordability but to your point, that's definitely not the only use case. I mean, of course, people are using them as gyms, pool houses, offices for working remotely. I'm trying to think of what else, art rooms, pottery rooms. There's really no use case we haven't seen at this point but just because one person is using it as a gym doesn't mean the next buyer of that home isn't going to use it for an aging parent or for a son or a live-in.

So, I think it's important to remember that the guest house is there to stay. And what we've seen in a few of our clients who have sold the homes, the guesthouse was a primary feature of the sale. It was part of the reason the house went for the price it did, or part of the reason the buyer picked that house because more and more people are looking for these additional non-attached spaces.

BRODIE: Are you finding that people are using them for short term rentals? 

DIAMONT: Honestly, and this is the God honest truth, very few of my clients, and we've done over 120 of these projects, very few people that we have seen are using them for short-term rentals. Very few. Like, I could probably count on one hand how many of our clients that we know for a fact said, “hey, I'm going to be using this for short term rentals.”

Because I know that was the big fear for people, which by the way, I don't even think that that's really something to just to be worried about, at least in the cases that I've seen, but that just hasn't been even close to one of the top five use cases that we've come across.

BRODIE: So understanding that, you know, depending on how people are going to use these guest houses will impact your answer to this, but I'm wondering if in general there are trends in terms of what people are asking for in their ADUs. Like are there particular design elements or like room configurations that seem to be particularly popular? 

DIAMONT: Well, our best selling unit is the live model. That's like our bread and butter, if you will. It's got one bed. It's got a full bathroom. It's got a full kitchen. Well, when I say full kitchen, I mean, depending on the municipality, depending if we can put a range, depending if the client wants those things. And it's got like an actual living space. So, I think what people want is really the flexibility.

“Hey, I need somebody to be able to stay in this and sleep in it, and live in it and be comfortable.” But if I wanted to use it as an office or use the living space as a gym and still maintain a bedroom, that flexibility, I think, has been the number one most important thing to people. It's not so often that we're getting one specific request for something that is just becoming like a common need. I think the bathroom, you know, having the ability to add a washer and dryer, having enough closet space, like all of these things are considerations people are making when they're building a guesthouse, because if they're going to add something to their property, and they're going to spend a lot of money, they want to know that, “hey, no matter how I plan to use this, I'm going to be able to.”