Which is better for Sale: ADU or Nicer yard?

8 Replies

I am looking into a Flip and with the new Codes for ADUs available in CA, I was looking for opinions of whether to build an ADU versus having a nice private yard?

1) Will a homeowner like the idea of an Income Producing home, but limited yard privacy

Or

2) would they prefer a nice private yard

Thank you in advance!

Well heck, it just depends on the potential buyer I would think....no way to know.

Way cheaper to install a nice yard than build an ADU. Do you want to throw down $200,000 on a guess? I'd do the yard and let the next owner decide what to do. You could get a pre-approved set of plans from the city and throw it in with the deal...

I think the question should be which produces the higher value in comparison to the cost. 

ADU valuations vary by area and associated comps. In most areas the ADU addition produces a value less than the hands off ADU addition costs. Unless you can find comps indicating otherwise, this is the safe mindset.

Improved landscaping also is not know for producing a great value with respect to cost.  The best value with respect to cost is in higher end areas or where the land scaping can be significantly improved at a low cost.

In most areas the improved landscaping will provide the better return, but probably not a great return.  

Good luck

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@Jacqui Fournier - I don't think it is an either/or question.  You can do both if you have the space and a thought-out plan.

However, @Dan Heuschele is correct that the return on the investment is not always great unless you can self-build. Or find a property with an existing ADU that can be brought to code and redesigned.

@Jacqui Fournier Even if the ADU turns out to be a good return when looking at the ARV, you'll find that the permitting and build process will add a lot of time. The added cost from the longer hold time can be killer so be sure to accurately estimate your holding time.