Whether you're buying your first home, looking to build one, or trying to make use of some free space, mother-in-law apartments (also known as accessory dwelling units or secondary units) are a great investment - even if you’re not planning to have relatives move in.
By renting out a section of your home, you can help ease the strain of a mortgage, or grow your savings. While these units can be difficult to find while house hunting, their advantages make them worth the extra effort - and if that doesn't work, you can always build your own.
What is a secondary unit?
Similar to duplexes, secondary units offer an entirely separated living space that is part of a single building. They typically have their own entrance, bedrooms, kitchen, and living space. However, while duplex units are typically mirrors of each other, secondary units are a smaller part of a primary property.
In some cases, homes are built with a secondary unit in mind, and the design reflects an obviously segmented property. Other times, homeowners add a secondary unit to take advantage of underused space.
If the home has multiple bathrooms and kitchens, a retrofit can be as simple as blocking off a staircase. Otherwise, you’ll need to add basic amenities in order to rent to tenants.
While this construction may seem expensive, it can pay for itself in as little as a year or two. And as long as it doesn't add to the square footage of the home, this type of addition may not even increase the property taxes (though your income taxes will increase).
Tally the benefits
Immediately and long term, the biggest advantages to owning a property with a secondary unit are financial. A tenant can be a huge help for first-time home buyers saddled with a steep mortgage payment. If the mortgage isn't necessarily a concern, that rent money can help with bills or savings contributions.
Looking ahead, some homeowners will put their tenant's rent money toward a down payment on their next home, which opens up the possibility of moving out and renting both units.
For parents whose children have recently left the nest, adding a secondary unit to rent out can help them save for retirement or provide income in twilight years. Taking recent trends into account, having this type of unit available can also be great in case adult children need to move back in, but don't want to sleep in their old bedroom.
Beyond the initial return on investment, secondary units have long-term advantages. Along with savvy home buyers, real estate investors and property management companies are always on the lookout for these types of properties, driving up demand and price. And as any house hunter in the last decade can tell you, they go fast once they hit the market. This means that anyone planning to build their own house should definitely consider the possibility of adding a secondary unit, which may help boost the resale value and interest in the property.
The downside
Once you begin renting a secondary unit, you are no longer just a homeowner - you are a landlord. For first time homeowners, this may be a bit too much to handle; the unexpected costs and problems that creep up on new homeowners are magnified when managing two units. Repairs that you may normally leave for another day become immediate when they're in your tenant's unit.
You’re also responsible for finding a good tenant who will not only pay the rent on time, but will take care of your home. Tenants are sometimes harder on properties than property owners, which can be jarring for inexperienced landlords. Keep in mind that any damage your tenants do is damage done to your home.
So while houses with secondary units may seem like a cash machine, that machine requires a lot of time and maintenance to keep running. Make sure you have the time and energy to be on-call for repairs, emergencies, bill collection, complaints and more.
Finally, make sure you've done all your research before you start bricking up that basement staircase. State and local regulations vary, and while you're probably okay to buy a home with an existing secondary unit, building your own may come with additional fees and paperwork.
Despite these potential issues, property management provides valuable experience that will benefit any homeowner. For many, the benefits of owning a property with a secondary unit far outweigh the disadvantages. Paying down a mortgage, building a nest egg, or increasing a home's value are all great reasons to look into properties with secondary units.
Related:
- Homes For Sale With Mother-In-Law Suites Fit for a Queen
- Why Sharing Your Home Just Got Easier
- What to Know Before Building a Guesthouse
via Zillow Porchlight | Real Estate News, Advice and Inspiration http://ift.tt/1SPFESZ
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