Would adding guest house to property be worth cost

4 Replies

Thinking of either creating tiny house in backyard or doing a guest house with plumbing and electric. The tiny house depreciates. 

Would it be cost affective to create a guest house? 

Not planning on selling property. This would allow me to rent out one more room inside the house. 

@Adam Rees   There are lots of factors here to consider.  The first is will what you spend on the guest house going to be returned to you when you sell and more importantly will it make you money when you sell.

Typically it is less expensive to add on to a home than it is to create a new structure from the ground up.  When adding on you are able to tie into the existing plumbing, heat and air, etc.  

I know it my market that a guest house would be too much of a value add unless it was a substantial structure near our college in town.

@Adam Rees Guest houses, mother in law houses are also known as ADU'S accessory dwelling units. Check to see what your city or county requires and than run the numbers. Since you already own the land and many times you can get permits to tap into your main houses sewer and water lines this can be a big value add. Many cities will limit the square footage of the ADU, some will require stick built, some even allow mobiles. You can put family in them, ie. mother in law, or rent them long term or if you are in a good area you can use it for a vacation rental. I have a nice 2/2 which I get $1200 per month. The pros are you get to keep your eye on your renter. The cons are your tenant is your next door neighbor.

One of my properties is a duplex + ADU. The ADU gets higher rent than the other half of my duplex. I am in a rental-heavy part of town and the fact that they are quite literally in their own SFR (shared yard) is a huge plus for people moving up the ladder. That unit alone pays 50% of my mortgage!

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