Accessory dwelling units, or ADUs, are gaining popularity for a few reasons: they are inexpensive and efficient to build, they offer a place for loved ones to age in place or get a foothold in the housing market, and they can add cash flow as a rental unit.
However, can they increase the value of your property when it’s time to sell? Read on to find out!
Is an ADU a Good Investment?
ADUs can be an excellent investment, depending on what your goals are and how you plan to use them. Here at Austin Tiny Homes, we see folks building tiny houses for a multitude of purposes. Some want a granny cottage for their elderly loved ones, a private studio to use as office space or a rental unit.
Here are some of the benefits ADUs provide:
Additional Living Space
The biggest upside of ADUs is they increase your living space. As the homeowner, you can use this space however you choose:
- A place for aging loved ones to live close to home comfortably
- A landing pad for recent graduates as they start their first jobs
- A pool house or guest cottage to make entertaining easy
Office or Studio
To be classified as an ADU, these tiny homes must have cooking and sanitary facilities, but that doesn’t mean your ADU can’t function as a home office or studio. Perfect for creatives, business owners, and remote workers, ADUs offer a private office space without a commute.
Rental Income
ADUs can be used as long-term rentals in most municipalities. Some can even be used as short-term rentals (think AirBNBs), though that is subject to regulation based on your local laws and zoning. By using an ADU as a rental, you can use your property to generate cash flow.
Can I Sell my ADU?
In certain municipalities, you can sell a tiny house by subdividing your lot and selling the house with the property it’s on. In Austin, you can subdivide your property and sell an ADU as a standalone home. However, this varies across the rest of the metropolitan area — so if you build an ADU with the express purpose of selling it, be sure to do your research first!
If you aren’t able to sell just your ADU, but still want to hit the market, your secondary structure can set your home apart. Prospective buyers will see the options of increased livable space, privacy for guests, or the potential for income from renters.
Whether or not you choose to sell your Austin tiny home, an ADU is a wise long-term investment that can increase interest in buyers and add value to your home while you are living in it!
How Much Does an ADU Increase My Property Value?
Adding an ADU to your property automatically adds value to your home! Depending on the structure and its use, you can increase your home’s value by up to 35% by adding an ADU. Especially if you are saving money by having a loved one live at home or putting away the increased income from rent, an ADU is an excellent long-term investment.
Will ADUs Lose Value Over Time?
Depreciation unfortunately does occur in tiny homes, just as it does in traditional houses. However, there are a few ways to ensure you continue to get maximum enjoyment and value from your investment:
Opt for stick-built over prefab.
Stick-built means an ADU built with solid wood framing onsite, versus a manufactured home that is simply assembled on your property. Stick-built houses can be customized to match your exterior and adhere to HOA standards — in addition to being high-quality construction that will last.
Choose detached rather than converting existing space.
There is nothing wrong with a garage conversion if that’s what best suits your needs, but if you are turning usable living or garage space into an ADU, you will lose some of the benefits of the increased square footage. This is because you are changing the use of existing square footage rather than adding more.
Learn More About Building an ADU in Austin, TX
Ready to explore your options for an ADU on your Austin, TX property? We’re here to help! At Austin Tiny Homes, we provide a white-glove service, meaning you get to choose the look and feel of your ADu, and we take care of the rest.
Our full-service approach includes planning and design, permitting, construction, and generous warranties to back up our superior craftsmanship.
With solid, stick-built construction, your ADU will not only stand the test of time and add usable space to your home, but it will also increase your property value and set your home apart for potential buyers.
Get in touch today for a free site visit to make your ADU dreams a reality.
