Accessory Dwelling Units: How Much Can They Increase Property Value?

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Accessory Dwelling Units: How Much Can They Increase Property Value?

If you’re considering building an ADU, you might want to know how they increase your property value. Get the details here!

Would you love to increase your property value? Are you wondering what benefits an accessory dwelling unit (ADU) can bring to your home?

ADUs are becoming increasingly popular and for good reason. Homeowners gain privacy, extra living space, and plenty of possibilities without purchasing any additional property.

Yet building out is an investment you’ll want to think about. Does an ADU increase property value, and by how much?

Let’s take a look.

What Is An ADU?

An ADU is a small, residential dwelling unit that is on the same property as an existing single-family home. It may be a separate building that utilizes the plumbing and electrical services as the main unit. Or it could be located above a garage, in a basement, or as an attached unit with a separate entrance.

ADUs are often known as “granny flats” because they provide older relatives of families with a place to live. These folks can maintain their independence with a separate kitchen and bathroom. Yet they are still close enough to family to rely on them in the event of an emergency or health need.

Still, ADUs can be used for a number of different purposes. For example, you may have college-aged children who would benefit from having a second apartment when they are on break. Or, if zoning allows, you could use it as a rental unit and earn regular passive income.

ADUs can also be used as home offices. They provide privacy and a quiet place to work in a time when many jobs are becoming hybrid or remote. You could also choose to utilize yours as a man-cave or she-shed.

Some individuals choose to build an ADU because they are artists who need a separate studio space. If you are a painter, dancer, or musician, it can allow you to create all day long without interruption.

Some individuals are serious about fitness and love the idea of having a workout room that is on the property. They can kick and lift to their heart’s content and not have to worry about who they are disturbing.

What Advantages Does an ADU Offer?

One main benefit that ADUs offer is a low-cost alternative to senior housing. In fact, a private room at a nursing home could cost over $100,000 per year

This financial advantage can also be shared with children who are in school or just starting their careers. The cost of housing and rent is skyrocketing and many young people have tens of thousands of dollars in student debt. An ADU provides them with an affordable place to live while allowing them to have a separate life from their parents.

Provided that your zoning allows for it, an ADU can also provide you with an excellent income source. A fresh new kitchenette and bath can make it a great destination for young professionals seeking a home. If you price it right, you could be attracting quality renters for the rest of your lifetime.

The right ADU will also provide you with environmental advantages. Those who live in it are using the same water supply and electricity as the main unit, thus saving your community resources.

Flexibility is another reason many homeowners choose to build an ADU. For example, you may have college-aged kids now who would love their own on-property apartment.

In the future, you could use it as a home for aging parents or investment property. Or you could look forward to having your own private hideaway where you explore your work and interests.

Does an ADU Increase Property Value?

In spite of its advantages, an ADU costs money to build. Many individuals are hesitant to have one constructed if they aren’t going to get their money back in property value.

You’ll be happy to know that ADUs can increase property value by 25% to 34% of your home’s value. 

Of course, the exact amount of value that your ADU adds to your home will depend upon a number of factors, including your local housing market and the condition of your property. 

If you want to be certain you’re getting the maximum value for your home, it helps to do a little research before building. A local real estate agent may be able to help you gauge the local market. 

For example, are homes with ADUs selling in the area? How much more are they selling for than comparable homes without ADUs? 

It also helps to get an idea of the types of families that are purchasing units in your neighborhood.

For example, you may have an “upsize home” type of property that couples will tend to buy in their later years. This could be a great opportunity because these types of families will be looking for housing for older parents or grown kids.

If you plan on using your ADU as an investment property, you’ll also want to find out about the rental market in your neighborhood. Are there places of work and recreation close by that would attract young professionals? What kinds of properties and rental prices are quality renters looking for?

Building an ADU is a big decision, and you’ll want to make sure you’ve done your research before you take the plunge.

The Value of an ADU

An ADU is a serious investment that can really pay off. With the right unit and the right timing, you can increase property value and add prime living space to your property. 

Don’t stop getting smart about building accessory dwelling units now. For quality ADU design and production in your area, contact us today.  

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