5 Reasons you should build an ADU
Increase Property Value and Potential Resale Value
One of the most common reasons homeowners build an ADU is to increase the value of their property. The amount of money required to construct the ADU can be minuscule in comparison to the value added to the overall property. For example, in Southern California, if you were to construct an ADU for 250-300K, the resale value of the property could increase by up to roughly 600K depending on the local market. If it takes 12-14 months to permit and build the ADU, this would be a great return on investment.
If you are attempting to sell you home and are not receiving great offers, it may be worth building an ADU on your property. Adding a new separate living structure to your lot can bring a much different buyer to the table. They may be willing to offer a much higher price knowing that they will be able to offset their mortgage payment with income generated by the ADU.
Private Guest Accommodations
When family or guests are in town for extended periods of time, having separate private accommodations outside of the main house gives privacy to both parties. Having a separate kitchen, living space and bedroom for your guests allows minimal disruption in your daily routine.
If you have elderly parents or grandparents, a separate ADU allows you to spend time together, while still maintaining your own schedule. This option is often much more attractive than putting them in a nursing home.
Depending on the site plan, if the ADU and main residence are organized around a communal outdoor living space, it can be a great way to spend evenings outdoors and allow each party to retreat to their own quarters at night.
Rental Income – Short Term & Long Term
Having an ADU on your property allows you to generate supplemental income from your property. The arrangement can either be structured to generate long term reoccurring rental income or short term rental income to help cover your expenses.
If you live in a vacation destination town, you have an opportunity to generate short term rental income from your ADU. Using a service such as Airbnb, you can rent your ADU for a weekend at premium rates. These rental rates can often be enough to cover a large portion of your mortgage each month. Check the restrictions for these short term rental programs in your area as many cities prohibit this type of rental.
Low Cost Housing for Adult Children
In many areas where the cost of living is exceptionally high, having a detached ADU on your property can be a great place for your adult children to stay while they are getting on their feet or attending to college. It allows a separate space for your adult child to begin gaining some independence and to save money. This can be a great stepping stone during transition times of their lives.
Separate Space to Work From
If you have a home business, having a detached structure to work from can enhance productivity and focus. Using the ADU as an art studio, workshop or office allows you to have a separate space for client meetings and can create a more professional setting than an in-home office in your primary residence. Having an ADU on your property to work from also eliminates commuting and wasted time in traffic.
Instead of sinking money into office rent each month, invest that money into building an ADU. When you sell your property, you can re-coup the cost of construction in the sale of the property.
With the right site planning, landscaping and design, there may be options to completely separate your primary residence from your ADU. Having separate entrances and parking can help to present a more professional appearance to your business.