How Much Value Can An ADU Add?

By

Zia

| Last Updated: 27 Jan 2021

Apart from it resolving the ongoing housing crisis, ADUs offer so much value to homeowners, renters, and the community altogether.

Ever since Eano Home Renovation started, we have been having a string of various projects, and ADUs mostly dominate them. Aside from the high return on investment (ROI), rental income, and extra living space, ADU units offer value to each and every homeowner. For you to get a clearer picture of what these values are and up to what extent ADUs can be beneficial, here's a brief breakdown.

 


 

How Does ADU Add Value?

1. Added Livable Square Feet

Whether you convert your garagewhether you build from the ground upyou're adding a square foot little by little. Adding an existing space to your existing property obviously increases new square footage and that's going to add value to your home when the appraiser comes and checks out your lot.


2. Brand New Construction

All the ADUs we build alongside our primary dwellings are counted as new construction. New space, new flooring, new furniture, fixtures and so much more.

 

3. Certain Markets Crave for ADUs

Since California is a flourishing housing market, primary dwellings with ADUs is definitely a catch! People who are both homebuyers and investors lookup for properties that would be aesthetically appealing and profitable in the long run. On the other hand, homeowners who have ADUs in their properties have no trouble putting up their homes in the market as people tend to perceive it as more valuable compared to those who do not.

 

4. Bedroom and Bathroom Addition

Again, it's going to be a bedroom and bathroom edition whether it's a studio or one-bedroom ADU,  it'll still count on your property as an extra bedroom or bath space. And that is going to bring the value of your property up anytime an appraiser sees it.
 

5. Rental Income

If you have your single-family home and you have your garage ADU, or ground-up ADU rented out, you downright realize the value these home additions can add. Let's assume you're getting $1,500 rental income per month, that'll become a substantial amount of money per year. With that, you're earning a steady flow of income with an ADU unit that continuously brings value to your home.

 



 

How Much Value Does an ADU Add?

1. No definitive answer

As to the exact or precise value of how much an ADU can add? We could all agree that there is still no definitive answer to this. It varies from project to project, city to city, and from ADU type to another ADU type.

 

2. Look at previous computations of ADU projects

Start looking at homes that have been sold in the past. See how much profit the homeowner has earned from renting out or selling out a property with an ADU. The closest amount you can get will always be coming from actual projects with varying costs, budget,s, and type. When checking for computations like these, you can have a ballpark figure of how much can you gain just by adding that accessory dwelling in your home.
 

3. Look up the local price per square footage

Just like what you'll do with the previous ADU project computations, you can also look up the local price per square footage. You can go down and see some of the newer homes or older homes that have been sold and you calculate what your average price per square foot is in that area. That can give you an idea of the value you can gain compared to the expenses you'll incur during the project.


4. Appraisers are counting ADUs

Before the ADU market became a housing necessity, homeowners have been experiencing quite an issue with most of the appraisers. People are struggling to come up with a better value for their homes since they can only remodel or upgrade them to boost their overall value. Now, appraisers can easily identify which house would sell best and which property would gain lots of traction in the market, thanks to the booming market of ADUs.
 

5. Calculate how much rent is generated

Once you do this, you can clearly calculate how much value can an ADU really add to your property. Compute how much you'll allot for the ADU project then see how long can you pay off the expenses you incurred after renting it out. You need not worry because ADUs are known to provide a high return on investment (ROI) and you'll have various options however you want it to be rented out.

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