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Will An Accessory Dwelling Unit Add Value?

Have you been wondering, “Will an accessory dwelling unit (ADU) add value to my property?” We strongly believe that adding an ADU is a logical choice when considering options for increasing your property value. In fact, it is one of the safest methods to make a positive impact on the property’s value.  Knowing the ins and outs of whether adding a property addition like this will actually bring you more income and will help you feel more confident in your decision.

You might think it might be difficult to give a concrete number unless you get your property appraised before and after building an ADU on your property. However, after researching the issue, we have come to the conclusion that simply using the market value of square foot in your zip code and multiplying it by the size of your detached ADU will get you a very close number to the value of adding an ADU.  When we work with you on choosing and designing your detached ADU, ADORE Homes will help you give you a better idea of what’s involved in the process so that you know what you’re getting into. The best thing you can do before starting is to get in touch with a professional company like Adore Homes to help you plan out every detail. From the design work to the permits, manufacturing, and installation, ADORE handle everything for you.

Keep reading to get a better sense of how a detached ADU may affect your property value with our quick and comprehensive guide. Hopefully, we’ll be able to help you answer the question ‘will an accessory dwelling unit add value’ or not.

Your Answer To Will An Accessory Dwelling Unit Add Value

The legal definition in California of an accessory dwelling unit (ADU) is “an attached or detached residential dwelling unit on the same lot as an existing dwelling unit zoned for single-family or multifamily use that provides complete independent living facilities for one or more persons, including permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated.”

ADU’s are quickly growing in popularity for several reasons, as it provides a communal-style living while still providing autonomy. Often when people come to us for an ADU, they are interested in keeping elderly parents close, provide a place for their adult children to live, or simply generate secondary income. 

But one of the main benefits of adding an ADU by ADORE Homes is increasing the resale value of your home. The rise in ADUs is directly correlated with the increase in housing shortages. To help with California’s housing shortage, laws are changing to make it easier to get quick approval to build units. Let’s take a closer look at ways that accessory dwelling units can add value to your property. 

ADU’s Can Generate Rental Income

One of the most common reasons homeowners embark on an ADU journey is to generate additional rental income. Mortgage payments are no joke, and extra income is never frowned upon. Detached ADUs can be a great way to charge prices that will cover your mortgage and other housing costs, essentially meaning you get to live for free as you pay off your loan.

ADORE Homes has extensive knowledge of the new State legislation and with our virtual assessment tools can make sure you qualify for an ADU.  Once you move forward with us, we’ll obtain all the permits necessary to add our unit to your backyard.  Once the project is done, we’ll crunch the numbers for you and help you find a tenant right away so that you don’t have to worry about making your payments as the rental income will pay for the loan amount and, in most cases, will leave you extra monthly cash.

Create an Investment Opportunity With ADUs

Building an ADU on your property generates monthly income and raises your property value, which makes them the perfect solution for first-time real-estate investors who don’t quite have the money to dive into multi-family homes or condos. 

Additionally, with the new guidelines that went into effect in January 2020, your property might even qualify for up to two ADUs if you own a multi-family property. In addition, you’re able to build one full-size and one junior ADU. This means that you could potentially have two ADUs generating two income streams and significantly increasing the property’s value.

Especially if you’re an investor already in the field, think about all of the opportunities that come with adding ADUs. If you have five or ten properties that already bring in revenue, imagine what adding an extra rental opportunity could bring in for you. 

Will An Accessory Dwelling Unit Add Value?

It can be challenging to measure to what degree an ADU adds resale value to your property. Local market conditions and trends will impact that value. Some studies suggest that ADUs contribute between 25% to 30% of each property’s assessed value and could increase the resale value up to 50%. 

Many things in your local market contribute to your ADU value, including population size, housing availability, HOA restrictions, and more. The decision to include an accessory dwelling unit might also be influenced by inventory shortages, housing trends, mortgage prices, and other market forces that might impact home-buying decisions. 

For example, some local municipalities have changed their zoning laws to encourage homeowners to build an accessory dwelling unit on their properties. ADUs help ease housing shortages and provide options for aging family members or children reaching adulthood who might struggle with high housing costs.

The short-term rental industry is steadily increasing in popularity. More homeowners are discovering that having an ADU on their property provides an excellent opportunity to list it on vacation rental sites where they can offer their space to short-term guests and earn additional monthly income.

Bottom Line

All in all, we think that the value an ADU, and specifically, an ADU from ADORE Homes, can add to your life can be limitless. If your goal is to make a profit, we are here to help you make it happen. 

When you need help getting started or need a professional to handle the ins and outs of adding an ADU to your property, look no further. At ADORE Homes, we’re the go-to ADU specialists in the Bay Area. We will handle everything for you, from the permits to the installation process. Let us help you figure out how to increase the value of your property. 

We’ll answer your questions and make the entire process a breeze. Get in touch with us today!

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