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Backyard Apartments

Aug 01, 2020 07:18AM ● By Elena Hutslar

Backyard Apartments

How can ADUs provide additional income?

A nationwide boom in accessory dwelling units (ADUs)— also known as garage apartments, casitas, granny flats, carriage houses or in-law suites — has turned many American homeowners into developers and landlords.


A study released July 2020 by mortgage giant Freddie Mac says there are at least 1.4 million accessory dwelling units, or ADUs, in the United States.


Sam Khater, Freddie Mac’s chief economist, says the trend is especially strong in pricey metro areas. For homeowners struggling to afford ever-appreciating homes, rental income from ADUs helps pay the mortgage. In cities with little new construction, granny flats add much-needed housing stock, one backyard apartment at a time.


“Clearly we’ve got a supply problem that’s not going to be fixed anytime soon,” Khater says. “ADUs can be a small part of the solution.”


One of the most appealing things about an ADU is the income potential. Some people build an ADU with the intention of renting it out to others, while others consider building an ADU to live in themselves, then rent out their main house as a way to both downsize and provide a steady source of income.


ADUs offer a very appealing option for many renters. Think newlyweds, single professionals, or even empty nesters as prime renter candidates. Homeowners who rent out their ADU, whether long-term or to short-term vacationers, add an income stream to cover some or all of their housing costs. It’s a strategy known as House Hacking — finding a way to reduce/eliminate your housing costs through someone else paying them.


ADUs are great for aging parents.  “People are looking for alternatives to assisted living,” says Kol Peterson, author of “Backdoor Revolution,” a book about ADUs.  Assisted living facilities can be more expensive than an ADU alternative without the benefit of being in a family environment.  Additionally, the coronavirus contagion has spurred investment in housing, and the pandemic has only increased interest in ADUs, real estate experts say. COVID-19’s fatal spread in nursing homes means some homeowners would rather keep older relatives at home.


To learn more about the benefits of adding an ADU to your property contact ADU 4 You….