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Accessory dwelling units are becoming a popular source of passive income for homeowners, and a number of prefab construction companies are making a name for themselves with their eco-conscious and affordable options. Now JP Morgan is jumping on the bandwagon with a grant of $3.5 million to be split evenly between two nonprofit lenders: Housing Trust Silicon Valley in San Jose and Genesis LA Economic Development Corp in Los Angeles.

These initial efforts are being pushed forward with the goal of becoming statewide. Of course, expectations are high, especially for regions where low- to middle-income housing is scarce.

“We’re imagining that people will build these accessory dwelling units and rent them to the kindergarten teacher at their kids’ school,” Kevin Zwick, CEO of Housing Trust Silicon Valley told The Mercury News. “There’s a lot of people who’d want to take advantage of this, but the process of building, owning and renting out an accessory dwelling unit can be more complicated than it seems.”

In typical Silicon Valley fashion, Housing Trust will use the funds to raise more money from outside sources such as banks and corporations. Then those funds will be lent out as capital loans to homeowners, as well as an educational outreach program, since the red tape around additional dwelling units, or ADUs, is daunting. Money will also be set aside for a program that will preserve and renovate multi-family buildings of a smaller scale, which typically range from five to 20 units.

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