How An Accessory Dwelling Unit Adds Value To Property

Homeowners have many options when it comes to adding value to the sales price of their home. Apart from the usual refresh of the existing rooms and exterior, there is also an overhaul of the outdoor spaces. The indoor-outdoor flow aspect has been on the radar of homebuilders and owners for many years. The objective is to give the perception of more living space by utilizing outdoor space near the home. Adding a deck or balcony and maybe partially closing it in with a retractable roof and walls definitely goes a long way in improving the value of a property.

However, if your property has the outdoor space for an accessory dwelling unit (ADU) without encroaching on the enjoyment of the main home, then this is surely an effective solution. So what is an ADU and how can it be used legally.

What is an ADU?

In North America, the small house is known as an ADU, whereas in other regions globally, it’s called a minor dwelling, or a tiny house. There are also some colloquial names for it too, including ‘granny flat’.

Back to the USA, the ADU is typically less than 1000 feet or 92 square meters. Now, this brings us to another interesting fact, before we move onto its uses and value-add benefits.

Did you know the size of an ADU or ‘granny flat’ :), is the actual size of the main dwelling in Europe?

They built homes small in Europe, or we should say – they used to build small residential dwellings and that met the needs of households at the time. The now historic homes (many over 100 years old) were small but strong, and this is why they are still the most prevalent dwelling in Europe, including the UK.

For more information see this guide on ADUs

Uses and Benefits of the ADU

Adding dwelling to your property is very handy for visiting family, friends, but it also can add value as a rental.

Rental potential

Renting out an ADU while it’s on your property will put money in your pocket to pay the mortgage, and it’s a great starting point should you want to become a landlord with a portfolio of rental properties.

Older homeowners with family now departed maybe finding the ‘family home’ has become too large and hard to maintain. Adding an ADU to the property gives these homeowners the option of moving into the ADU while renting out their family home.

Room for relatives

There is a saying ‘build it, and they will come‘. There’s always a risk with investing in anything including real estate however everyone needs shelter – it’s a primary requirement, so along with food and water, it’s a low-risk strategy to add value to your property. The likelihood of your new dwelling remaining vacant for long is low. As soon as the word gets out that you have an extra liveable dwelling, family and friends will get in contact.

Plus letting family and friends use your ADU, does not need to mean added costs for you. All parties will benefit from such a setup, for example, you can save on any expenses you might face if you had to support your relative while they were renting elsewhere, and the person in question will also be able to avoid significant costs without feeling like they are being a burden. For friends and visiting family, they can contribute either directly or indirectly, whichever solution is more preferable for you.

Business opportunity

If your ADU is self-contained, you could look at renting it out as a commercial premise. The minor dwelling may be ideal for a professional services firm, i.e. legal or accounting. Likewise, it may be attractive to other service providers like pet grooming, or as a yoga studio.

Summary

Adding dwelling to your property can improve your cash flow and add value to your home in a way, a quick renovation can not. This makes it an attractive proposition for prospective homebuyers who may work from home, or seek a home and income property.