logo
Buying a Prefab ADU Was Supposed to Be Easier Than This

Buying a Prefab ADU Was Supposed to Be Easier Than This

Business Mayor05-05-2025

A few months ago, Vanessa Gibbons contacted Meka Modular, a San Jose, California, prefab builder, only to discover that something seemed off. She and her dad were planning on having an accessory dwelling unit (ADU) built in Joshua Tree, and Meka's designs 'were simple and affordable, so I reached out,' she told us via email. But after an initial phone call with the business owner, Gibbons received 'an informal email saying he could have his accounting reach out for payment if I was ready to move forward. I replied asking for photos of projects built in the past year and have not received a response.'
Eventually, she did hear back. 'As we changed all our models last year with a new line up [sic] we have none installed yet. We have numerous under permit currently and they should be installed in the field in the next few month [sic],' he wrote. The company 'is not listed on the Better Business Bureau,' Gibbons says, and 'has no pictures of actual houses, just renderings.'
Reddit threads echo her bewildering experience, including this comment from 'jupiteroot' three years ago: 'I had my '15 minute' call with them 3 weeks ago and have not been able to get a single question answered since. My impression is that they will not go any further unless you pay the $2750 feasibility study fee.'
Over much of the last decade, ADU production has exploded, especially in California, in response to the housing crisis. (Dwell even built one of its own.) But with it has come countless ambitious small startups with big plans, many of which are exposing industry pitfalls that signal caution for consumers like Gibbons. As with Meka, which Dwell featured online in 2019, some provide eye-catching renderings that seemingly never materialize, while others have left a trail of unrefunded deposits on unproduced projects, financial falters, and even criminal fraud accusations. Sometimes, too, startups that belly up end up liquidating their assets or filing a type of bankruptcy that pays off investors first, leaving customers in the lurch.
Last year, for example, Multitaskr, an ADU builder formed in 2020 in Chula Vista, California, abruptly closed after its license was revoked and it was accused of bilking customers out of more than $15 million. Allegations posted on LinkedIn by a former employee, Anna Zúñiga, offer a rare glimpse into the company's operating conditions. 'Twenty 'active' projects had been stalled for over a year, with homeowners growing increasingly frustrated,' she wrote. 'The problems ran deep: thirty projects from early 2020 didn't have their plans submitted for permits within the originally provided timeline—a fact hidden from customers. Our construction team was too small to handle the workload, and cash flow problems prevented hiring additional staff.'
Connect Homes installs a home in Malibu after the Woolsey Fires.
Before the company liquidated, Connect Homes cofounder Jared Levy gave a revealing interview early last year with Builder commenting on the future of prefab: 'Right now, we are an industry that is uncomfortably stuck somewhere … between the construction process and an industrialized process,' he said. 'If we want prefab to skew more toward being an industrialized product … we won't get there through automation and robots. We will get there by changing the regulatory environment for building prefab homes. And when we do, someone can do their research, pick their manufacturer, order a house, and have it delivered the next week.' Venturing Too Far Too Fast?
But it's not that simple, yet. Permitting processes remain time-consuming, and can be especially challenging for ambitious new ADU builders. While venture capital can help get a company off the ground, many new prefab ADU builders borne by it are beholden to investors to scale up quickly to achieve returns, before they gain experience with the unique challenges of ADU development.
'Building the local relationships needed for efficient permitting and installation is critical,' says Noerena Limón, CEO of Casita Coalition, a California multisector nonprofit that works to advance middle housing. 'The successful prefab builders understand this part of the work and set realistic expectations with investors on timelines for returns and the need for factory capacity to keep pace with customer commitments.'
One cautionary tale from the mid-2010s is that of Kasita, an Austin, Texas, start-up founded by environmental science professor turned entrepreneur Jeff Wilson that courted venture capital, raising $11.5 million in the process to fund its idea for affordable plug-and-play micro-housing. The concept was widely celebrated by the design community, and many expected it to 'disrupt the urban landscape' and possibly revolutionize the housing industry. Eventually, Kasita was sold, and it never produced a single ADU.
Prefabricated and stackable, Kasita's units promised a solution to America's affordable housing crisis.
As Levy pointed out, the industry's inherent challenges are already considerable; and through their lack of experience, venture capital backed home building start-ups might not be the best way to deliver prefab homes at scale to consumers because of the vagaries of the industry itself. 'The idea of a construction company raising money from venture capital investors is relatively new,' says Liz Young, getting at the idea that this is still uncharted territory. Young is the founder of Realm, a, yes, venture-backed company, one that uses advanced technology and data analysis to help guide clients through construction processes, but does not build homes. Regardless, 'modular and prefab is extremely promising and is one of the most affordable housing options, but we still need to mature the ADU ecosystem,' adds Limón. Small Scale
Dan Fitzpatrick serves as president of the nonprofit Tiny Home Industry Association, whose members include owners of small traditional construction businesses in each state. The group advocates to legitimize tiny homes (which are sometimes prefab, and used as ADUs) as viable housing and promotes best practices. 'If we hear of issues with bad actors, we try to get the word out,' says Fitzpatrick. Read More Concept Sketching for Industrial Design, an Online Course
One notable 'bad actor' in Colorado, Holy Ground Tiny Homes shuttered after filing for bankruptcy in 2022, leaving almost 200 former customers on the hook for $6 million. The company, which enjoyed status as a Christian nonprofit, had convinced them '… to pay full or partial deposits for tiny homes, delayed building those homes for months or years, and refused to refund the deposits,' according to Business Den. 'Some Holy Ground victims, who are spread across the country, lost their life savings.'
You can almost hear Fitzpatrick shake his head over the phone.
In any case, he says more of his association members are getting into modular construction instead, '… for multiple reasons, including better acceptance of the product they're creating by local building officials, and more efficient use of labor. Also, more and more, the ability to re-use modules when deconstructing a home is a plus.'
'Modular and prefab is extremely promising and is one of the most affordable housing options, but we still need to mature the ADU ecosystem.'
—Noerena Limón, housing advocate
Like many of his peers, Fitzpatrick has noticed a proliferation of dubious online advertising through third-party vendors, including Amazon, hawking ADU and tiny house kits. For example, the Las Vegas, Nevada, company Boxabl advertises, solicits investment, and even promotes an 'affiliate program' that rewards online user engagement—all through social media platforms. Lauded by the likes of Elon Musk, who purchased one of its 'casitas' in 2022, the company has faced much scrutiny since first delivering 156 of its units to Guantanamo Bay, Cuba, in 2020. Last year, the SEC charged a former employee for fraudulently offering securities in the company. (Boxabl has not responded to a request for comment.)
'What consumers need to ascertain before they click the buy button is—are they getting a shed in a box or a unit that meets the building code requirements in their municipality?' says Fitzpatrick. That applies in the real world, too: 'They need to ask up front, to what standard are they being built and what independent firm is certifying it? That separates the wheat from the chaff.'
While navigating the ADU market may seem fraught with risk, prospective consumers can do much to educate and protect themselves. 'People should attend some sort of workshop to understand costs, contracts and timelines,' says Limón, of Casita Coalition. 'Vet builders carefully, make sure they have experience in your local jurisdiction; avoid all-in pricing before site evaluation; request to see local completed projects [as Vanessa Gibbons did]; read contracts thoroughly and look for clear scope milestones and refund policies; avoid large up-front payments.'
Vanessa Gibbons, who is interested in building an ADU, says Meka Modular wasn't able to provide any images of real projects, just renderings like this one.
As more cities and states look to leverage the success of ADUs to meet their housing challenges, it may also behoove those in the market to understand the industry's larger context and growth potential. After initially passing a landmark law to ease ADU zoning restrictions in 2017, California has enacted many more bills, including AB 1033, which provides jurisdictions the opportunity to opt in and allow homeowners to sell ADUs as condos. So far, the cities of San Jose, with one of the country's most expensive housing markets, and Santa Cruz have completed the opt-in process—and more are in progress. Due to their smaller square footage and lot sizes, ADU condos typically sell for less than single detached homes in the same neighborhoods. Communities that opt in will help fill an urgent need for attainable starter homes in the state.
'ADU adoption has been considered one of the most important housing reforms ever, certainly in California,' says Limón. 'When you think about the fact that we have the second lowest homeownership rate in the entire country and the most underproduced kind of unit is that starter home, this will become the only starter home supply in the state.' Tapping Potential
San Jose Mayor Matt Mahan recently penned an op-ed in the San Francisco Standard that proposed state housing officials negotiate the mass purchase of factory-made dwellings; the units would be used to create a kind of lease back program to enable lower-income homebuyers to make mortgage payments as they get ADU rental income. Mahan suggests the state could establish a 'buyer's club' as part of a 'program to negotiate the bulk purchase of up to one million factory-made backyard cottages,' and issue lease-revenue bonds to enable the purchase of 'deeply discounted ADUs.' As the piece explains, 'the state would pay the upfront cost of purchasing and installing the ADU in willing homeowners' backyards, then the homeowners would buy the unit via a small monthly payment, presumably using revenue they earn from renting it.'
Such an enterprise could demonstrate how to begin matching the housing shortage with a large-scale response designed to bring down ADU costs. It may also serve as impetus for scaling up installation partners on the ground, easing the way for more efficient ADU housing development in the future.
The enormous unrealized potential of ADUs is clearly not contained to California. At least seven states across the nation now have effective statewide ADU laws on the books, and a dozen more have developed promising laws for upping production. 'The momentum is growing, which is obviously exciting,' says Limón. 'That may also be tempting new builders to get into the game and serve everyone immediately.'
But just as permitting processes can take time, so does building an entire new industry—and, as many of these examples illustrate, there will be growing pains. For one, Vanessa Gibbons, the reader who prompted this article, is willing to face that reality. (The company she first contacted Dwell about, Meka Modular, replied for requests for comment but has not left one.) She and her dad are still exploring ADU options for their place in Joshua Tree, and have narrowed their search parameters to manufactured homes. 'For our budget of under $200K all in, including permits and getting utilities installed, it's the only available option we can find,' she says.
Illustration by Scott Wilson
Related Reading:
READ SOURCE

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

RDDT Investors Have Opportunity to Join Reddit, Inc. Fraud Investigation with the Schall Law Firm
RDDT Investors Have Opportunity to Join Reddit, Inc. Fraud Investigation with the Schall Law Firm

Business Wire

time42 minutes ago

  • Business Wire

RDDT Investors Have Opportunity to Join Reddit, Inc. Fraud Investigation with the Schall Law Firm

LOS ANGELES--(BUSINESS WIRE)-- The Schall Law Firm, a national shareholder rights litigation firm, announces that it is investigating claims on behalf of investors of Reddit, Inc. ('Reddit' or 'the Company') (NYSE: RDDT) for violations of the securities laws. The investigation focuses on whether the Company issued false and/or misleading statements and/or failed to disclose information pertinent to investors. Despite a significant portion of Reddit's traffic coming from individuals performing Google searches, the Company claimed that Google's shift to AI in search results would not have a material impact on its user growth. Analyst Baird cut its price target for the Company's shares on May 21, 2025, citing its concerns on the very issue of Google's AI answers causing users to stop visiting Reddit. Based on this news, shares of Reddit fell by over 9%. If you are a shareholder who suffered a loss, click here to participate. We also encourage you to contact Brian Schall of the Schall Law Firm, 2049 Century Park East, Suite 2460, Los Angeles, CA 90067, at 310-301-3335, to discuss your rights free of charge. You can also reach us through the firm's website at or by email at bschall@ The Schall Law Firm represents investors around the world and specializes in securities class action lawsuits and shareholder rights litigation. This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and rules of ethics.

The Prompt: Meta Eyes Scale AI
The Prompt: Meta Eyes Scale AI

Forbes

timean hour ago

  • Forbes

The Prompt: Meta Eyes Scale AI

Welcome back to The Prompt. Meta is reportedly planning to acquire a 49% stake in data labelling behemoth Scale AI for $14.8 billion, according to The Information. The deal is slated to place Scale AI's young billionaire CEO Alexandr Wang at a top position inside Meta along with a number of Scale AI employees, who will work in a new AI lab dedicated to developing 'superintelligence'— an AI system that outperforms human capabilities. CEO Mark Zuckerberg is reportedly closely involved in assembling the team of AI researchers and has gone to great lengths like setting up a WhatsApp group called 'Recruiting Party,' personally reaching out to potential recruits and rearranging desks for researchers to sit near him, Bloomberg reported. The new lab is part of Meta's efforts to keep up in the cutthroat AI race while wrangling a string of internal issues including employee churn, management problems and delayed or disappointing product releases. Now let's get into the headlines. DATA DILEMMAS Social media network Reddit sued Anthropic for allegedly training its AI models on personal user data without permission, and continuing to do so despite telling Reddit it had stopped, Forbes reported. Reddit was an early mover in capitalizing on its rich reserve of organic human data catalogued in its discussion forums, striking licensing deals with OpenAI and Google. In a lawsuit filed last week, Reddit claimed Anthropic's bot accessed its servers 100,000 times. BIG PLAYS ChatGPT will now be able to connect to a crop of external applications such as Google Drive, DropBox and Sharepoint, allowing enterprise users to glean insights from internal documents through the chatbot. It will also be able to access meeting recordings and transcriptions. The announcement was the latest in a series of feature releases intended to increase ChatGPT's functionality and keep people engaged. OpenAI has also reached $10 billion in annualized revenue through sales of its consumer products, CNBC reported. AI DEAL OF THE WEEK Young AI coding startup Anysphere has become the face of 'vibe coding' — a phrase coined by OpenAI cofounder Andrej Karpthy describing the use of large language models to create applications when the user doesn't necessarily need to know how to program. The nascent startup has raised $900 million at a $9.9 billion valuation and claims to have about $500 million in annualized revenue. The startup is betting that AI is going to dramatically transform software engineering in the next decade, making it magnitudes easier to program applications while eliminating cumbersome aspects of the process like correcting syntax or or debugging code. All a person has to do is press tab and AI completes the line of code for you and jumps to the next spot. Also of note: Enterprise AI startup Glean raised $150 million in Series F funding at a $7.2 billion valuation. Employees use the company's AI tools to search for internal information and build AI agents (software that can carry out specific tasks end-to-end) that can resolve IT tickets, write performance reviews and help prepare for meetings. Glean claimed to have passed $100 million in annualized revenue in February. (Read our 2023 profile of the company here.) DEEP DIVE Runway AI Throngs of excited moviegoers piled into Alice Tully Hall at Lincoln Center on Thursday night to be a part of Runway's third annual AI film festival. Cristobal Valenzuela, CEO of the $3.3 billion video and photo generation AI startup, spoke to a crowd of hundreds, asking them to think less about the digital tools and AI software used to make the short films they were about to watch, and instead focus on their human elements. The winning film, Total Pixel Space by Jacob Adler, is a jumble of both realistic and impossible vivid landscapes like a flying pig, people floating in a city or inside a pool, a bloom of jellyfish and a meerkat donning a bright yellow turtleneck. The 9 minute 28 second film raises the question of how many images could possibly exist in the world. The answer: Every image is composed of thousands of pixels— coordinates of positions and colors, a coalition of numbers. The film was selected from 6000 submissions, up from 300 a year ago, as interest in experimenting with AI models has exploded over the years. For all the creative benefits of video generation AI software, TV networks and filmmakers are adopting the technology for a more pragmatic reason: to produce and edit both television shows and movies quickly and more cheaply. AMC Network, which has produced popular shows like Breaking Bad and The Walking Dead, recently announced its plans to use Runway's AI models to create marketing and TV content. Lionsgate, the studio behind blockbuster hits like The Hunger Games and The Twilight Saga, has a partnership with Runway to use its models with a goal of making films on a fraction of the budget. But several studios don't want to openly admit they're using AI due to fears of backlash from creatives, who have voiced their concerns that these AI models are trained on copyrighted data scraped from the internet without consent and compensation. Runway is also currently facing litigation from a group of artists who claim their data was illicitly used to train its AI models. WEEKLY DEMO The Department of Government Efficiency developed a faulty AI tool to review thousands of contracts at the Department of Veteran Affairs that could be cut, labelling them as 'munchable,' Propublica reported. The software, developed by a programmer who has no formal experience in AI, was prone to making errors such as hallucinating the size of contracts, misreading them and inflating their value. MODEL BEHAVIOR Autonomous vehicles became easy targets during protests against Immigration and Customs Enforcement arrests in Los Angeles over the weekend. At least five Waymo driverless vehicles that were in the area were vandalized and set ablaze amid the protests. After the incident, Waymo halted its service in parts of downtown LA.

Reddit (NYSE:RDDT) Appoints Adam Collins As First Chief Communications Officer
Reddit (NYSE:RDDT) Appoints Adam Collins As First Chief Communications Officer

Yahoo

time5 hours ago

  • Yahoo

Reddit (NYSE:RDDT) Appoints Adam Collins As First Chief Communications Officer

Reddit saw an 8% increase in its share price over the past month, coinciding with several developments. The appointment of Adam Collins as the Chief Communications Officer could improve the company's communications strategy, potentially enhancing investor confidence. Additionally, integration with Smartly's platform might bolster advertising capabilities, aligning with the company's growth objectives. While Reddit's price movement is consistent with broader market gains seen in the tech-heavy indices, which are benefiting from ongoing trade discussions between the U.S. and China, these internal changes could have added weight to its upward trajectory. We've discovered 1 risk for Reddit that you should be aware of before investing here. The end of cancer? These 23 emerging AI stocks are developing tech that will allow early identification of life changing diseases like cancer and Alzheimer's. The recent appointment of Adam Collins as Chief Communications Officer and the integration with Smartly's platform could significantly influence Reddit's international growth narrative by enhancing communication strategies and boosting advertising capabilities. These developments are expected to drive user engagement and advertiser expansion, particularly in key non-U.S. markets. Over the past year, Reddit's total shareholder return was a considerable 97.10%, suggesting strong performance. This highlights the company's ability to capitalize on market opportunities despite challenges, outperforming the US Interactive Media and Services industry's 12.7% return for the same period. With revenue forecasts predicting a 21.3% annual growth and earnings anticipated to increase 36.9% annually, the introduction of advanced ad solutions and data licensing could further strengthen financial projections. These initiatives align with Reddit's strategic goals, potentially enhancing its profitability margins and positioning the company for sustained growth. The current share price of US$110.86, compared to the analyst price target of US$149.28, reflects a 25.7% discount, suggesting room for appreciation as Reddit continues to execute its strategic initiatives effectively. The valuation report we've compiled suggests that Reddit's current price could be inflated. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NYSE:RDDT. This article was originally published by Simply Wall St. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@ Error in retrieving data Sign in to access your portfolio Error in retrieving data

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store