- An ADU can take up space that could have been used for storage, or a garage.
- Good maintenance is required in case an ADU is used as a rental.
- Building an ADU will cost money, there is the possibility of an increase in property taxes, and utilities resulting in bigger monthly expenses.
Some people use ADUs as a means to house family members, but many others use them for rental income.
If it is a wise investment or not depends on various factors, like local zoning ordinances, maintenance costs, upfront costs, possible tax consequences, and activity in the rental and housing market and also depends from one landlord to another.
A homeowner intending to build an ADU should first confirm if it is lawful on their property.
If a homeowner has to refinance the property then by building an unlawful ADU they will face issues.
A possible code enforcement action resulting in fines could be a result of building an unauthorized ADU. So before engaging in any building owners should look to their zoning ordinances and ideally consult with a legal specialist.
There are various other factors to consider while building an ADU, the cost would vary depending on whether the ADU will be attached or detached from the main home?
What renovations are needed, and does the homeowner need to seek professional services from construction contractors, engineers, or surveyors?
The ideal way of financing an ADU depends on the owner’s individual situation. They can take out a renovation loan, refinance if the homeowner has equity in their home, or pull from available cash on hand.
A homeowner’s tax bill could increase with the construction of an ADU, so it would eliminate a significant amount of the profit.
The housing and rental market varies from one state to another and from one city to another.