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Accessory Dwelling Units or ADUs, a booming investment

There are various alternatives that people have been putting into practice to cope with the consequences of inflation, to be able to cover the common or daily expenses of life. And in the field of housing, ADUs continue to be one of the options that has had the most growth in recent years.

What are known as accessory dwelling units (ADUs), have become a way to combat the high cost of living, for thousands of people.

What are ADUs?

An ADU is a space suitable for occupancy that is separate from the main house, but on the same land or property. The accessory dwelling unit is owned by the primary homeowner, and is usually sold as part of a package with the property.

Today there are many buyers who are looking for properties that have an ADU, which allows them to obtain additional income.

The opportunity to earn extra money that ADUs provide their owners is precisely the biggest draw of these living spaces. It is because of this that these units have been booming in the last ten years, with regard to the sale and purchase of homes.

According to statistics, approximately 70,000 properties with an ADU included were sold in 2019; and in the year 2000 the sale of this type of properties was only 8,000. The growth in demand for homes with accessory dwelling units is exponential, and the pace is maintained.

Are ADUs an effective solution?

Whether accessory dwelling units are the ideal solution for people is going to depend on a number of factors. For some it may be an ideal option to deal with money and housing shortages, but for others it may not necessarily be.

So that you can better evaluate this alternative, we present its main advantages and disadvantages.

Advantages of buying a house with an ADU

Among the main benefits of buying a property with ADU are the following:

  • There is the possibility of obtaining a passive and additional income, by renting the ADU. At this point you should keep in mind that the amount of income will vary according to the location of the unit, and market demand.
  • The fact that the property has an ADU can represent an added value to the home. So when you sell it, it can increase its total value by 35%, when compared to houses that do not have an accessory dwelling unit.
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  • You can also use the ADU as accommodation for guests or some family members who are visiting the area.

Disadvantages of buying a house with an ADU

As for the disadvantages that a property with ADU can represent, we have the following:

  • There are a number of expenses and responsibilities involved with owning a space for medium or short-term rental. These expenses may even consume the income earned through the ADU.
  • It is necessary to make the necessary repairs to the unit in a timely manner.
  • You should also invest in the cleaning service if the rental is short term.
  • Insurance must also be purchased to cover the additional structure. This usually represents a few hundred extra.
  • If the rental of the ADU is only for short stays, you must also supply it with basic elements such as hygiene products, paper, etc.
  • On the other hand, you should invest a little of your time to manage the rental and serve your tenants.

Additional aspects to consider

A very important aspect that you must take into account is that local and state regulations regarding ADUs and temporary rentals tend to vary constantly.

That is why it is highly recommended that you make sure you know all the rules and laws, and that you take into account your region’s taxes, zoning requirements, as well as housing laws.