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.

Homebuilders and owners have been considering the indoor-outdoor flow for many years. The objective is to provide a better living space by utilizing outdoor areas near the home. Adding a deck or balcony and maybe partially closing it with a retractable roof and walls can significantly improve a property’s value.

However, if your property has the outdoor space for an accessory dwelling unit (ADU) without infringing on the enjoyment of the main home, then this is undoubtedly an effective solution. So, what is an ADU, also known as a minor dwelling, and how can it be used legally?

What is an ADU?

In North America, the tiny house is known as an ADU, whereas in other regions globally, it’s called a minor dwelling or a small house. Some colloquial names include ‘granny flat.’

The ADU is typically less than 1000 feet or 92 square meters in the USA. This brings us to another exciting fact before we discuss its uses and value-added benefits.

Do you know the size of an ADU or ‘granny flat,’ which is the size of the main dwelling in Europe?

They built tiny homes in Europe, or, more accurately, they used to construct small residential dwellings that met households’ needs at the time. The now historic homes (many over 100 years old) were small but firm, so they are still the most prevalent dwellings in Europe, including the UK.

ADU regulations and definitions can vary by location, as they are typically subject to local zoning and building codes. Some places have embraced ADUs to address housing shortages and promote sustainable development, while others may have more restrictive regulations.

In recent years, there has been a growing interest in promoting ADUs to increase housing affordability, density living, and flexibility in housing options.

For more information, see this guide on ADUs

Uses and Benefits of the ADU

Adding a dwelling to your property is handy for visiting family and friends, and it can also increase its 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 for becoming a landlord with a portfolio of rental properties.

Older homeowners with family departed may find the ‘family home’ has become too large and complex to maintain. Adding an ADU to the property allows these homeowners to move into the ADU while renting out their family home.

Room for relatives

There is a saying, ‘Build it, and they will come.’ There is always a risk with investing in anything, including real estate; however, everyone needs shelter—it’s a primary requirement. Food and water are low-risk strategies for adding value to your property. The likelihood of your new dwelling remaining vacant for a long time is low.

For example, For our Canadian ADU, as soon as the word gets out that you have an extra liveable home with features such as double slider tilt windows in the greater Ottawa area, family and friends will get in contact. Plus, if you allow family and friends to use your ADU, it does not need to mean added costs for you.

You can accept a weekly rent from your friends. If your elderly family members are using your ADU,  you’ll have peace of mind knowing they are in a home with the right features, like insulation and double-glazed functional doors and windows.

Business Opportunity

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

It should not be surprising to learn that all professional service providers started in the family home. Your family doctor, lawyer, and accountant used a room in their homes to practice.

Today, we work part of the week at home in a home office.  An ADU would be overkill for an office. However, it would be an ideal setup for small professional services businesses like a medical practice or accounting firm.

Summary

ADUs, or granny flats, can take various forms, including converted garages, separate structures, or additions to existing homes.

Adding a 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 attractive for prospective homebuyers who may work from home or seek a home and income property.