Is Building an ADU Worth It?

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Luke Martin
Luke Martin
I am Luke Martin, a writer who loves homes. My words are about creating comfy and nice living spaces. Let's explore ideas for decorating and making homes cozy together. Join me on this journey to make your house a special place to be.

ADUs, or accessory dwelling units, are gaining traction as a smart investment for homeowners. Often referred to as granny flats, in-law units, or backyard cottages, these additions and structures provide a unique opportunity to improve your property value and function at a reasonable price tag. However, is it more affordable than building a traditional addition? This blog discusses the pros and cons of ADUs vs. more normal additions, as well as legal considerations and real-world factors, like plumbing.

What Are The Benefits of Building an ADU?

ADUs offer versatility and the ability to make passive income. Firstly, an ADU increases your property value. By adding a secondary dwelling, your property becomes more attractive to potential buyers who see the possibility for rental income or additional living space for family members. According to industry experts, properties with ADUs tend to have higher resale values than those without.

ADUs also offer a solution for housing family members. Aging parents can move into a new ADU, adult children can avoid the soaring cost of the real estate market by funding an ADU of their parent’s property, or extended family members can purchase property together and live together while maintaining privacy. In parts of the country where real estate is incredibly expensive, ADUs make expansion possible.

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Building an ADU Vs. Building an Addition

When expanding living space, homeowners often weigh the options between building an ADU and adding an addition to their existing home. Both choices have their merits, but they fit different needs.

Building an ADU is generally more flexible than a permanent structure. Unlike an addition, which permanently alters the structure and layout of the main house, an ADU is a separate entity. This separation offers greater privacy and does not disrupt the existing home’s design. It’s an excellent option for landlords who wish to rent out space without sacrificing their own living quality.

If you simply need more space in your single family home, perhaps for another child or a home office, you may want to build an addition. Additions will more closely match your home’s aesthetic, and they can usually feed off your existing electric and plumbing needs. Just like with a bathroom remodel or other home improvement project, you have complete control over the materials and design.

ADU For Rental Income vs. Adding a Prefab Office

The potential for generating rental income is one of the most popular reasons to build an ADU. In areas with high rental demand, an ADU can provide a steady source of income that helps cover mortgage payments or other household expenses. This setup is particularly good in urban areas where apartment rents are high and housing shortages are common. If simply buying a vacant lot can cost upwards of $200K, an ADU is not a bad idea!

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On the other hand, homeowners might consider adding a prefab office if the primary need is a home office or a dedicated workspace. While a prefab office does not usually offer the same income potential as an ADU, it costs less to set up and can be an efficient way to create a workspace without a major renovation.

Choosing between these depends largely on your financial goals and local market conditions. If rental income is a priority, an ADU might be the way to go. If you’re more interested in increasing productivity or maintaining a work-life balance with a dedicated office space, a prefab unit could be sufficient.

Plumbing Adds Extra Costs

One of the significant considerations when building an ADU is the cost of adding plumbing. Plumbing installation can be expensive, particularly if the ADU is located far from the main house’s existing plumbing connections. The cost can vary widely based on factors like distance, the terrain of your yard, and local regulations, which may require certain types of plumbing systems.

The complexity of adding a bathroom and kitchen, which are typical in ADUs, increases these costs. Each requires water supply and waste lines, not to mention fixtures and appliances. It’s essential to get a detailed quote from a licensed plumber during the planning stage to understand these costs fully.

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Despite the high initial expense, the benefits of having a fully functional separate living space can outweigh these costs over time, especially if the ADU is rented out. Your plumber in Marietta should be able to give you a quote before you even start the building project, and unless you need other expensive items like a hot water heater or something else, it should be affordable. The key is to perform a detailed cost-benefit analysis considering the potential rental income, increased property value, and initial and ongoing expenses.

Is an ADU Worth It? Yes, If You’re in a Hot Market

If you live in the greater Los Angeles area, for instance, you should not be deterred by the challenges of building an ADU. You can literally turn your backyard into passive income by only spending $120K-$160K, and there’s no way that you could purchase a rental property for that amount of money. That said, you will need to sacrifice some of your privacy to do so. Speak with a contractor who has experience with ADU plans and building, and you’ll have your rental unit ready in no time.

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