ADUs are becoming more popular for good reason: increased property value, convenience of working from home, and sheltering family members during various stages of life are just a few advantages. Is an ADU right for you? Find out here!

ADUs (accessory dwelling units) are like the chameleons of additional space. Need an additional office area that’s private and quiet? Check! Looking for a great place where aging parents can live at an affordable price near you? Check! Do you have grown kids that need a place to live while still exercising independence? Check! What could you do with an additional 800 to 1,200 square feet of liveable space on your property? The possibilities are only limited by your imagination.

The usable space of an ADU – also called Granny Unit, Backyard Home, Casitas, or PreFab Home – is the obvious advantage of building this unit on your property. However, there are a ton of financial benefits, too!

Rental Income

Finding affordable housing in California is a real and common dilemma that many people are facing. According to CalMatters, “The median price for a single-family home shot up to a staggering $758,990 in March — a nearly 6% increase from the previous record of $717,930 set in December and a whopping 24% increase from March 2020, according to figures released Friday by the state Department of Finance. It’s at least the sixth time the Golden State’s housing market has broken its own record amid the pandemic — it did so five times in 2020 alone, cracking the $700,000 median price mark for the first time in August.”

The real estate market is intense right now with demand greatly exceeding supply causing multiple offers, cash offers, and over asking offers knocking many would-be buyers out of the competition. However, this is a great investment opportunity for those considering purchasing an ADU.

Another thing to consider is thinking ahead to the future. If you take out a ten year loan on the ADU, practically speaking, you’ll pay it off in ten years or sooner if you have a renter in the property. Now let’s say you build your ADU when your child is 10 years old. They’re not going to live in a separate house at that young age, but it’s a perfect transitional home for when he goes to college or wants to save money for his own single family home one day. 

Or perhaps your parents are in their early 60’s when you build the ADU. In ten years they could need additional help to get to and from medical appointments or they may need to conserve money to pay for care in their twilight years. 

While you may not need the unit right now, renting it out until you need it is a great way to finance this expense while also planning for the future. 

Home Office

Many news reports have been posted lately about how working from home isn’t just a fad during COVID-19. In fact, numbers are projected to increase. Global Place Analytics recently announced that, “Our best estimate is that we will see 25-30% of the workforce working at home on a multiple-days-a-week basis by the end of 2021, here’s why:… Before the crisis, surveys repeatedly showed 80% of employees want to work from home at least some of the time. Over a third would take a pay cut in exchange for the option. While the experience of working at home during the crisis may not have been ideal as whole families sheltered in place, it will give people a taste of what could be. The genie is out of the bottle and it’s not likely to go back in.”

Think of having your own home office and the financial advantages it could bring: less wear and tear on your vehicle. Lower gas bills. No toll charges. No train or metro tickets. Time commuting could be time working increasing your output thereby giving you a raise and promotion (okay, that one may have gone a bit too far, but you get where I’m going.). How much of your life could you take back and how much could you get done without the hassle of commuting or being distracted by fellow co-workers? Sound like a huge potential advantage to me!

Increased Property Value

Property value is determined by what similar properties have sold for near you and also price per square foot when we’re talking about new builds. When it comes to similar properties that have sold within your neighborhood, chances are we’re talking about traditional houses that don’t have an ADU on their lot, so this number is only a fraction of the equation. 

The California Association of Realtors® recently reported that in February 2021, the average price per square foot was $338, 19.4% higher than February 2020! Furthermore, cites that the average cost to build a home is $164 per square foot. “The average cost to build a 1-bedroom house is around $195,000. 1-bedroom homes come in close to 1,200 sq.ft. on average, which is smaller than the typical home. This means that it is possible to build a 1-bedroom home for less than it would be to build a larger home. Keep in mind, however, that it is possible to build much larger 1-bedroom homes, which can increase costs. It is also possible to build smaller 1-bedroom homes. The materials and home type built also influence the final cost.”

So where does an ADU fit into this discussion? While ADUs and backyard homes vary greatly, you can cut costs depending on the company and materials you use. For example, a prefab ADU is generally cheaper because you’re not hiring an architect to design a building from scratch and using prefabricated parts lowers the cost of creating custom materials. When meeting with a reputable ADU company such as ADU Warehouse, you can discuss  your budget, lot size, and how you’re planning on using your backyard house to determine your design and budget that best suits your needs.

There are countless advantages to building an ADU, and the guys at ADU Warehouse can’t wait to tell you more of them. Contact them today to find out more about the growing popularity of backyard homes!

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