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Building an efficient guest house or ADU in the city

This post was written by guest blogger Jon Wheaton, who owns and manages a handful of homes in Arizona.

Compared to prior generations, Millennials tend to be more drawn to urban areas rather than the suburbs (of course, the acceleration of remote work due to the COVID-19 pandemic could affect this trend!). The increasing density of cities can result in a variety of obstacles including difficulty finding housing, increased rent/home values, traffic, and inadequate utility infrastructure.

A handful of years ago, I showed a home to a client who intended to purchase in Phoenix. The backyard had a large tree, but was otherwise a large, open space, and I recall mentioning, “this would be the perfect backyard for a guest house!”

The client wasn’t interested, but I was. I thought of the backyard of my own single-family home, which wasn’t huge, but could probably accommodate another structure. And I thought of what an exciting opportunity a “new build” ADU (accessory dwelling unit) would be, allowing for more housing in a dense environment, with almost no restrictions on the sustainable and/or convenient upgrades the home could feature.

Building an ADU allows the property owner to benefit from a new income stream, while also contributing to the community by increasing the supply of housing to more adequately match demand. This should prevent rents from rising so dramatically as a result of increased demand.

With a bit of forethought, a homeowner can reduce tenant utility costs, minimize carbon footprint, and improve tenant quality of life – all of which I hoped to accomplish with the build of a 500sqft guest house in Phoenix. Some of the steps that I took with these goals in mind are described below.

Mini-split air conditioners

A mini-split system is smaller, easier to install, and more efficient than a traditional HVAC (heating, venting, air conditioning) system. Whereas a traditional HVAC system requires ducting throughout the guest house, a mini-split system only involves a conduit going from the condenser to the wall unit.

One could think of this as a more luxurious window air conditioner that is also capable of heating.

There are two mini-splits in the guest house: One in the living room and one in the bedroom.

The pros:

  • Both systems do not need to be running at once. In other words, if the tenant only needs to cool/heat one space, it is not necessary to wastefully cool/heat the other space.

  • There is no ductwork, which saves space inside the home.

  • If one is able to put the condensers on the roof, they won’t take up space on the ground. Since they are much lighter than an ordinary condenser, use of a crane is not required to get them onto the roof.

The cons:

  • Because there is not a vent in the bathroom, it can sometimes get a bit warm (mitigated part of the year by a window in the bathroom, if possible).

  • These systems are often operated by remote; if one is concerned about losing it, hardwired wall thermostats can be purchased to supplement the remote.

  • Condensate drains are notoriously susceptible to clogging, especially in very humid environments.

The breakdown:

  • Brand: LIVO 9,000 BTU 3/4 Ton Ductless Mini Split Air Conditioner with Inverter, Heat, Remote

  • Cost: $830 plus about $75 in parts each, totaling $1,800 for the two units.

  • Difference: About $1,200 less than approx. $3,000 for a whole-house system; however, the whole house system would also necessitate the additional cost of ductwork, whereas a mini-split system does not.

Attic fan

An attic fan is a very inexpensive way to remove hot air from the home when it is cooler outside than inside. Air is pulled from the living space and pushed into the attic, where it is then vented out from the attic via roof vents. Note that the windows inside the home must be open for fresh air to replace the removed air inside the home.

One could think of this as a more effective double-sided window fan (both of which blow air in and out) with the additional benefit of cooling the attic.

This is not common in Phoenix because it is typically warmer outside the home than it is inside. However, having an attic fan is still beneficial in Phoenix during the spring, fall and winter.

The pros:

  • Uses less than 100 watts when running at full capacity.

  • Cools the home much quicker than a double-sided window fan.

The cons:

  • The specific one that I installed is very loud! – it sounds like a noisy warehouse fan. More expensive fans that are designed as attic fans are less noisy.

  • City inspectors often encounter bathroom fans that incorrectly vent into attics and, as a result, may incorrectly apply requirements for bathroom fans to your attic fan. Whereas a bathroom fan removes humidity from the air, an attic fan removes regular (dry) air. As such, attic fans are not subject to the same code requirements as bathroom fans, which must vent directly outside via something like a roof vent.

The breakdown:

  • Brand: TerraBloom 10" Inline Duct Fan, Quiet Energy Saving EC Motor

  • Cost: $180 plus about $90 in ducting parts and the attic vents, totaling $270.

  • Difference: Certainly less than A/C, when weather allows for the attic vent to be used in place of the A/C. In a place like Phoenix, it is not a replacement for the A/C system.

Tankless water heater

Electric or natural gas?

A residential water heater can run on electricity or natural gas. Electric water heaters are more common because they are easier to install and are slightly less expensive up front. If one has a renewable electricity source (e.g. solar) or plans to install one, then an electric water heater is a solid option.

Most who advocate for long-term sustainability suggest full electrification (all appliances are electric), so that these homes will be “renewables ready” (that is, the home can be powered by 100% renewable resources, whether via a grid that provides renewable power, or via an on-site solar array).

Keeping that in mind, consider how one’s electricity is produced given the existing, traditional non-renewable structure (from the grid). On average, over 30% of electricity is produced using natural gas (per the EIA; 2019 figures): Natural gas is extracted -> it is used to heat water to steam at a power plant -> the steam moves turbines -> the turbines produce electricity -> the electricity is delivered to the home -> the electricity is used for various purposes, including heating water.

That is to say, in the conventional setup, heating water with electricity is a much less efficient use of resources than heating through natural gas delivered directly to the home.

Tank or tankless?

I recommend a tankless water heater since it is the most efficient and durable option.

Overall, considering electric vs. gas and tank vs. tankless, I opted for a tankless gas water heater in the short-term (and in the absence of an existing or planned solar or renewable system). One could also plan for electric in the future by pre-wiring the home for a tank or tankless electric heater.

The breakdown:

  • Brand: Rinnai V65EN 6.6 GPM Outdoor Low NOx Tankless Natural Gas Water Heater.

  • This is more than enough for a guest house. At my 4br home with four residents, though, I installed the 7.5gpm version and we have never run into an issue.

  • Another less expensive option is the Takagi T-KJr2-OS-NG Outdoor Tankless Water Heater, which I installed in a studio on another property and which works just as well as the Rinnai.

  • Cost: $680 plus about $80 in valves, totaling $760.

  • Difference: about $250 more expensive than an equivalent tank heater but payback period is less than a few years, and it will last longer.

Washer unit near an exit door with a clothesline directly outside

The guest house has a dryer, but the sun also provides an effective and carbon-neutral drying option! To encourage drying by clothesline, I recommend placing the washing machine next to an exit door with a clothesline outside. Ideally, the door would open to a largely shaded area (this is the best setting for drying in Phoenix since direct sunlight can fade clothing very quickly).

When the washer is located next to an exit door with a clothesline directly outside, tenants are more likely to opt for that drying option. They may choose to dry all of their clothes outside, as I do, or they may occasionally use the clothesline for bulky items such as a comforter.

The breakdown:

  • Cost: Some extra thoughtfulness during the build, and $20 for a clothesline.

  • Difference: One drying cycle costs less than 75 cents, but if the tenant uses the dryer less, you’ll have to replace it less often. Plus, their clothes or linens will last longer drying in the shade than in a traditional dryer.

Planning for electric vehicles

Over time, tenants will increasingly demand a place to charge their vehicle. Especially in the event of a new build, it is very easy to plan for this in advance, and not very expensive.

First consider how difficult would it be to add a receptacle later, given proximity of vehicle parking to an electrical panel. In some instances, the panel may be in the garage already, so little to no foresight is required. In others, one will want to pre-wire from the panel to the expected parking area.

The sizing of the circuit (and the wire) can vary; it all comes down to how fast one wants to be able to charge their car. (Refer to this Tesla chart: As an example, even a 30amp circuit (same that an electric dryer generally uses) would be satisfactory for most users (charges a Tesla Model 3 at 22mi / hr; fully charges overnight).

The cost: 100 feet of 10/3 wire, a dual pole 30a circuit, and the receptacle is about $185 (down to $125 if one only needs fifty feet).

A couple closing notes about collaboration and communication with tradespeople

It will be important to ensure that each of the subcontractors/tradespeople are on board with your ideas and understand the importance of your vision for the efficient options you wish to implement.

For example, your plumber may not understand the need for a larger gas line going to the location of the water heater. Or perhaps the general contractor or plumber may not want to place the tankless water heater in the optimal location, because it may be more difficult and they might find it totally unnecessary. In this second example, you’d want to explain that, while you understand it is out of the ordinary, having the water heater closer to the taps will save money, water, and energy because the water will get hotter sooner.

Please note, I am not a contractor, electrician, or plumber. The numbers reflected here are based on my own experience. Please check with your own contractor for accuracy.

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