8 Benefits of a Backyard Home

Today baby boomers are nearing retirement, teenagers are staying home longer and many adult children want to keep their aging parents close vs. send them to an assisted living center. Housing costs are rising an many families need additional income and options for space. An accessory dwelling unit (ADU) may be the answer in all of these situations.

Since January 1, 2020, ADUs, have become an increasingly popular option for homeowners in California. Many are interested in generating income from their home while helping to increase housing options within their community. In San Diego County where housing is scarce, building an ADU can help a community on multiple fronts, as it directly reduces housing shortages, provides homeowners with additional income when rented, and can increase the overall resale property value of homes.

Read on for 8 benefits of adding a backyard home in San Diego:

  1. Additional Income for your Family.

    These dwelling units are a great source of rental income. A two-bedroom ADU can bring in upwards of $2500 per month in San Diego. The cash on cash return is typically 15%+ in San Diego markets, or much more if the ADU is financed. Read more about the ROI of an ADU.

  2. Increased Property Value.

    A granny flat adds instant appeal and resale value to your home when you decide to sell. Rental income is attractive to buyers who may not otherwise be able to afford a property, or who have an extended family living with them. Homes with ADUs appraise higher than those that do not. Learn more about how ADUs affect property value..

  3. Affordable Housing for Family Members or Caregivers.

    With rising home prices and rent rates, many young adults are opting to live at home. An ADU affords both the parents and the child more privacy. Conversely, an aging parent may choose to move into an ADU on the property of their adult children to be close to their family, while still maintain their day-to-day independence. Live-in nannies and tutors are also great tenants for ADUs. Read about the questions families should think about when considering an ADU.

  4. Room for a Home Office.

    As many of us know by now, mixing “home life” with “business life” can be tough.  If you work from home, an ADU could be a great place for one or several family members to set up an office environment to focus and avoid distractions. Additionally, you may be able to write off the office space on your taxes as a business expense.

  5. Downsize Within Your Same Property.

    If you’ve always wanted to travel but don’t want to sell your family home, consider renting it out. Build an ADU to live in on your trips home, freeing up some money and retaining the option to move back into the larger home later.

  6. Space for Hosting Guests.

    Giving guests access to their own private unit could make everyone feel more comfortable and make your home feel less crowded. Particularly with extended stays, a separate ADU for guests can change the entire vibe of visits.

  7. Tax Benefits.

    Homeowners can accumulate tax depreciation deductions on ADUs, even accelerating the depreciation to take advantage of tax benefits sooner. Talk to your accountant to see what benefits you may be eligible for in your situation. Learn more about tax implications of ADUs.

  8. Sustainable Development.

    Granny flats use fewer resources and less land than single-family housing options. Compact units require less energy to heat and cool, which keeps utility costs down and reduces emissions. Learn more about sustainable design in ADUs.

Redfin asked ADU experts to share their best tips and tricks that will help you successfully build an ADU. Check out SnapADU’s tip on 14 Expert Tips to Consider Before You Build an ADU.