When you’re planning to add an Accessory Dwelling Unit (ADU) to your home, it is smart to consider how it will affect your home value. While an ADU will increase your home value, you may wonder exactly how much of your cost you’re likely to recoup. Unfortunately, the answer is complicated. Much depends on the kind of ADU, its size, quality, your local housing market, and more. Still, we can let you know what you should consider when assessing how much value your project might add to your home.
Increase Based on Home Value
You can get a rough estimate of your increase in home value based on your property’s current value. Well-planned ADUs tend to add between 20-30% of the property’s value back to it. If your home is currently valued at $500,000, then your 20-30% figure is $100,000 to $150,000. This is obviously a huge addition in value. However, ADUs that achieve this percentage are usually larger, highly valuable in the market, and have a fairly close budget to the amount they add. Don’t expect a small ADU with a budget of $50,000 to add this high amount.
Increase Based on Square Footage
Another way to estimate the value your ADU adds to your home is to consider the current square footage value of your home and what kind of value the ADU is likely to fetch per square foot. Divide your home’s current value by its total square footage to get its value per square foot. Most ADUs will not achieve the full value of the current home per square foot. Instead, it might achieve 30 or 40%. Take 30% of the current home’s value per square foot and multiply it by the projected square footage of your ADU. This is a reasonable estimate of how much value your ADU could add to your home.
Certain types of ADUs, with certain features will be more valuable than others. Those that add full bathrooms, full kitchens and bedrooms will add more to your home than those with half baths, kitchenettes, and separate bedrooms. An ADU that is essentially a small bachelor apartment that relies on function from the rest of the house will not add as much value as one that is essential its own one-bedroom apartment.
Of course, the devil is in the details. ADUs that have the right features for renting, for example, will be more valuable than those that don’t. If you have made an ADU as a granny or in-law suite, then you should be sure to include the features that someone would expect in these suites. Bathrooms with safety features, no stairs, and wide halls are just some of the options.
What do local buyers want out of a home? Even in areas where ADUs are not explicitly desired, you can use your ADU to meet other market demands. More bedrooms, home offices, media rooms, and other spaces can add significant value to your home. But it depends on the specific things local buyers are looking for. Talk to a local real estate agent to determine what kind of ADU would be most in demand.