Accessory Dwelling Units and Property Management: The Pros and Cons of These Potential Real-Estate Investments
Written ByBelong on Oct 13, 2021
Cities like San Francisco, Los Angeles, and Portland are making it easier than ever to obtain the permits necessary to create an ADU. But even if you can, should you build one?
How are you supposed to shelter in place if you don’t have a place to call your own? This is the question many local and state governments were asking themselves as Covid spread across the country in 2020. Of course, insufficient housing supply has been an issue for years in this country, but in many places it took the pandemic to force the local and state governments hand in loosening zoning laws.
But now we see legislation changing across the country, making it far easier for homeowners to create Accessory Dwelling Units. Some states like California - where undersupply has been a chronic issue, pushing rental prices to the stratosphere - went even further, creating grant programs to incentivize the construction of ADUs .
Still, despite their increasing prevalence, there remains a lot of confusion in the public’s imagination when it comes to ADUs. Some people aren’t even sure exactly what they are. This is partially a product of the fact that so many different kinds of structures fall under the ADU umbrella .
For example, a former garage that has been transformed into a living space — that’s an ADU; an attic space above a garage that has a plumbing system and heating units — that’s also an ADU; a small lane house or cottage completely detached from a property’s main house — that too is an ADU. Basically any room in a house — or secondary building on a piece of property — that can be used as an independent living quarters is classified as an ADU.
California — ever the innovator — has even created a new category of ADU: Junior Accessory Dwelling Units , which can be no more than 500 square feet in size, and are permitted to share plumbing and heating systems with the main house.
So why invest in adding an ADU as part of your property’s footprint? What are the pros, and what are the cons?
Well first of all, you get extra income from renting the ADU. Of course you can’t charge nearly as much for a room or a lane house as you would for a larger dwelling, but over time the profits add up.
And given how states and cities are incentivizing the construction of ADUs, the upfront costs aren’t nearly as onerous you might think they’d be. To convert a basement or garage to an ADU can cost as little as $18,000 .
But even without any help from the government , creating an ADU isn’t as pricey as you might think — even if you’re building a free-standing structure from the ground up. The laws are a little more lax than they are when it comes to building a primary dwelling. In California for instance ADUs can be wood-frame constructions , as opposed to infill buildings, which are far more expensive to erect.
They also provide flexibility; of course, you can rent out your ADU, but if need be, you can use it to house family members. This use-case became particularly prevalent during the pandemic, when extended families were looking for creative (and safe) ways to continue seeing each other during the lockdowns.
Another advantage of ADUs is that the income could actually make it possible for you to afford to stay in your main house. That is a real emotional and practical benefit, given that lots of people would rather not move – and lose potential appreciation – when housing prices are continuing to climb.
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Of course, there are some downsides, too, especially if you’re converting a room or area of your primary residence into an ADU. Privacy becomes an issue, especially with JADUs. Also the build-out process might prove to be disruptive — if you can even find qualified contractors to undertake the job.
And then there are the problems that come with being a landlord — finding and keeping residents, attending to all their problems, and having to chase down rent checks on a monthly basis. That inconvenience, if not awkwardness, is amplified when your “tenant” is living in such close proximity to you.
Fortunately working with Belong – a different kind of property manager - mitigates a lot of these concerns. They have digitized what was a cumbersome and painful process, and have had great success in finding people who will love the houses they move into.
But as beautiful as their app experience is, Belong also changes the game in the physical world. For one thing, you’ll have access to their Pros — highly qualified contractors and craftspeople who can do the work quickly and cleanly and with minimal disruptions.
Belong Pros can help you with every step of the process, whether you’re converting a pre-existing space into an ADU or JADU, or building a whole new structure. They conduct the feasibility report to determine if it’s even possible to build an ADU, collaborate with your architect (or recommend one, if need be), and construct the entire building on site. They’ve also partnered with Modal to install prefab ADUs, if a homeowner prefers to go in that direction.
You also have access to their concierges, who will manage your ADU, take care of finding residents, and even help you financially through vacancies.
So for homeowners who work with Belong, creating an ADU isn’t a question of why, but of why not?
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