Should you Invest in an Addition

July 19, 2019 Published by
guest house

Should you invest in an addition, or a casita for your home?

Guest houses or casitas, referred to as additional dwelling units (ADU) in technical speak, can be useful in retirement because you don’t have to worry about being inconvenienced if guests are over. Casitas can also be very helpful for those with parents needing to leave their home and downsize or have care close by. Generally, a guest house is completely detached from the main house, although that is not always the case. In the last decade, building guest houses or granny flats on a property has become a more common trend in the country. What with seemingly ever-rising housing and rental rates, many have found it convenient to create a space on their property for their elderly parents, children out of college, visiting friends, or as a rental unit.

Before adding an ADU to your new home’s plans, you’ll want to factor in the costs and logistics involved.  We suggest following these general guidelines to decide if a casita or guest house is the right addition to your new property. 

1. Consider Legal Logistics

The specific rules for guest houses and casitas vary by region.  Check your city’s zoning and building laws carefully. If your home is in an area with a homeowners’ association, ask the governing organization if guest houses are allowed.

Remember that ADUs require you to submit plans, get permits and follow all regulations, as well as incorporate standards addressing fire safety, water lines and sewer connections.

Work with your remodeler/builder and visit, which lists regulations by state and city.

2. Know the Intended Use

Talk to your partner or family members about the purpose of the additional space. Doing so will help you determine if it should be included in the construction project.  If you are thinking about aging in place or have friends or family with disabilities, you might want features such as ramps instead of steps and wide hallways to accommodate a walker or wheelchair.

To get the biggest return on your investment, consider making the guest space a multi-functional use space.  For instance, a home office could have a Murphy bed to accommodate guests or an in-law suite might include a space for arts and crafts.

You may even decide to build it as an income suite and lease it, if your homeowner’s association allows this use.

3. Understand the Costs

Even if the space is small, you’ll need to pay for features such as heating, air conditioning electricity and water. For this reason, the costs for a casita often add up quickly.

ADUs can range anywhere from $100 to $500 per square foot, depending on the design elements. That does not include permits, the foundation and installation, which can tack on an extra $15,000 to $25,000.  In addition to the upfront expense, you’ll want to think about the long-term cost. This might include an overall increase in what you pay for taxes, maintenance, utilities and insurance. However, an ADU can oftentimes increase the overall value of the property, depending on your location.

If you’re considering the idea of renting the place, take some time to calculate the monthly income you expect to receive from it, including costs such as vacancy rate. Then work out how many months it would take you to recover your initial investment.

4. Think through Location

Designs for a guest house often consist of a spot over a garage, a small apartment attached to the home or a separate structure located on a different part of the property.  If the guest house is attached to your home, you’ll be closer to visitors. You’ll likely enjoy lower taxes and fewer zoning restrictions. Separate accommodations, on the other hand, might lead to higher taxes and more zoning restrictions.

A guest house that stands on its own, however, provides more space for everyone.  Guests will love the separate quarters because regardless of how close you are to your guests, a little separation and privacy is always welcome.

For a free estimate and discussion if you are considering building an addition or casita call us today!

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