WHY BUILD AN ADU?
Just as each ADU is unique to its owner and occupants, so are the reasons for creating or building one on your property. And, just as the use of your primary home may evolve over time, so might the function and those living in your ADU change.
Equity / Value / Function
From a monetary perspective, ADUs generally tend to improve the function and value of your property. They are essentially additional dwellings that represent potential equity and value. Beyond the additional uses an ADU might bring to your living situation, it is not to find that a detached ADU can create as much as a 20 to 30% increase in assessed property value. In some locations, where housing is expensive, the addition of an ADU can represent as much as a 50% increase in resale value.
If planned and developed correctly, theoretically, the value of an ADU can potentially outweigh the cost of creating one. Each situation varies though, and you should always consider your unique circumstances, market factors, and finances whenever spending or making a major real estate investment.
So, first and foremost, one of the key factors supporting creating an ADU or JADU for many homeowners is that it might increase property value.
Consider it as a potential investment in your property. From a monetary perspective, that investment might also play out in other intangible ways that are more forward-looking and harder to quantify initially.
ADU: Triple Bottom Line Approach
In our approach at ADU MagazineTM, we work to apply concepts of triple bottom line (often referred to as TBL or 3BL) to ADUs. This way of looking things is primarily as many of us here have histories with environmental and sustainable activities.
The concept of Triple Bottom Line actually dates back over 500 years as a bottom-line thinking approach to accounting in business that includes more than just money in its calculations. It was popularized again with considerations of social and sustainability issues in the 1990s.
In Triple Bottom Line thinking, one considers social, environmental, and financial aspects when looking at value. Not just monetary or profit considerations. It is a throwback to the approach of the 1950s.
Our take on ADUs is much the same, with an approach of doing well by doing good.
From a social perspective, ADUs, done properly and legally, represent a significant potential social benefit to their occupants as well as the greater community. By social, we mean the equation of personal interactions with others on the property (who may be family or friends) as well as those interactions in the greater community as a whole. This includes thinking about the potential social benefit of addressing the housing crisis that does not necessarily require the development of additional mass infrastructure.
From an environmental perspective, ADUs piggyback on already existing infrastructure. When well planned, they do not overly burden the community (transportation, services, etc.). Additionally, when built with an eye towards energy efficiency and sustainability, they can be friendly to the environment.
Last, from a profit perspective, ADUs and JADUs can bring potential monetary value and revenue to their owners.
So, when looking at potential reasons to build an ADU, we strive to consider all three of these aspects in our calculations.
Perhaps most importantly, value (be it monetary, social, and environmental) follows function. At the end of the day, the reason to build an ADU is to have a unit that functions with specific uses or purposes in mind.
Following find some of the most typical reasons why you might build an ADU or JADU.
An additional living space for a Caretaker, Nanny and those that assist or provide services to family.
“In-Law quarters” is perhaps one of the most recognized names and uses for an ADU or JADU.
A dedicated home office or study space is now one of the most in demand hotlist items for homeowners.
Having an ADU or JADU represents a potential rental income stream – one that can be leveraged against your existing primary unit.
Sort of a reverse version of building an ADU on your property for In-Laws to occupy. Except, in this case, you would be building it for yourself.
Having an ADU or JADU allows a young adult child that returns home to continue progressing in their own space while pulling family resources.
An ADU or JADU can be the thing that offers flexibility in a variety of different situations as unexpected temporary housing needs arise.