ADUs Can Increase a Home’s Value by 35 Percent

Not only can an ADU, a.k.a. garage apartment, in-law suite, and granny flat, make your flip property more appealing to potential buyers, it can greatly increase its value.

Homes with an ADU are listed an average of 35 percent higher than residences without one, says home improvement website Porch.com.

An ADU, or accessory dwelling unit, is separate from the main home on a property and is located on the same lot. It can also be located within the main home, as long as it functions as a separate unit. Homeowners with ADUs can house aging family members, or earn extra income by renting out their units.

ADUs have become increasingly popular since the pandemic began, and they’re growing in prevalence at a rate of 9 percent, or 100,000 units, each year in many of the nation’s largest cities, according to Porch.com.

The average cost to build an ADU is $180,000, but that figure can vary depending on where your flip is located.  Building or renovating an ADU on your property comes with certain regulations, which are also based on the location of your flip.

Regulations may include a limit on the number of occupants that can live in a unit, a rental unit meeting Affordable Housing income and rental thresholds, restrictions on short-term rentals, minimum parking requirements, and maximums on the amount of square footage of conditioned floor space. Many cities across the country are improving their development regulations and ordinances to make ADUs easier to build.

As of 2019 there were approximately 1.4 million homes in the U.S. with an ADU. Among the states with the highest number of listings with ADUs were Oregon, Florida, Georgia, California, and Texas. Currently, Portland, Oregon leads the nation in ADUs. Vancouver, BC is the leader in North America.