Have you heard about ADUs? You may know them by another name, like “extra room” or “granny flat.” ADU stands for “accessory dwelling unit.” When you add another room to your primary residence, or add a separate structure on your property, each of these home additions qualifies as an ADU.
Can an ADU boost your home’s value?
In many cases, yes, adding an accessory dwelling unit could increase your property’s value. Not every home improvement project increases your home’s resale value. For example, studies by the National Association of Realtors (NAR) indicate that projects like luxury bathrooms or specialized kitchens don’t add much, if anything, to a home’s value when it comes time to sell. For example, glamorous bathroom amenities like whirlpools and walk-in waterfall showers, only return about half of what they cost when your home is sold.
If you add an ADU, either as part of your primary residence or elsewhere on your property, it could add significant resale value to your home. One study from Oregon showed that homes with ADUs gained up to 51% on average in resale value.
What are uses for ADUs on your property?
With changing families these days, sometimes ADUs are more than just “granny flats.” You may have younger family members who will continue to live at home while they attend school and work. You may have older extended family members who you want to continue to share your home.
Other uses for ADUs include rental properties, or as a location for live-in caregivers for elderly or disabled family members.
How can you pay for an ADU?
You can get a home equity loan (HEL) or a home equity line of credit (HELOC) to pay to add a room or structure to your property to accommodate additional family members. Other options to pay for the ADU include a cash out refinance of your existing home loan. You may even be able to add an ADU that you could rent for additional income — but don’t count on future rental income from a unit that isn’t completed to qualify for financing. Work with an experienced independent mortgage broker and home loan professional at California Platinum Loans, who can guide you through the process of financing your ADU and making a real change to your property to benefit younger or older family members.