Coach house garage vs regular garage w basement for an ADU

Chicago, Illinois
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Coach house garage vs regular garage w basement for an ADU

Svend W.Pro Member
Member since 2018 · 78 posts · 31 votes

Hi all

I'm househacking a two-flat home in northern Chicago (Evanston). I know I want to add an ADU, either in the basement or the back yard.

Since parking is a bit sparse on our one-way street and we use the driveway, I think in any case we will to build a garage to attract the kind of tenants we're targeting. I'm considering idea of biting the bullet and building a coach house with a garage.

Our basement is finished and has 2 BR (currently a half-bath, no kitchen), so that could be converted.

So, I think the choice would be between a 1) coach house w garage or 2) a regular garage + converted basement. 

I'm curious if anyone has any thoughts on the pros and cons of one over the other--my assumption is that you can't do both--in this market. The coach house would be considerably more expensive (I think the estimate I got was as much as $200K), though it would also have some obvious advantages to prospective tenants.

Thanks in advance.

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Jonathan Satizabal
Investor · Chicago, IL · Member since 2016 · 80 posts · 90 votes
5y

I would estimate the cost of a garage/ADU at 150k-200k. I don't know if it is worth it from a investment stand point. It my pay off with an added appraised value down the line. I would ask if the ADU would increase the value of your property by at least 200k? I thought I read that rents were going to be capped for ADU's in Chicago at about 1200 a month or only some ADU's would be approved only as affordable rental units based on an area's median income. In Chicago they cannot be used as short term rentals or Airbnb's. I'm not sure what Evanston is doing.

If you are looking at it as an investment, I would say take your 150k to 200k and invest it somewhere else you will probably get a better return with less work and less risk. I think the best ROI for an ADU is in a basement or attic unit. If you have a large property maybe look into a prebuilt or modular home that you can just drop on your land, or if you are handy you can build one yourself.

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  • Emanuel Rubio
    Member since 2020 · 7 posts · 4 votes
    5y

    Great post!

    I hope you get the answers you are looking for. I am currently house hacking a two flat, and would like a garage w/2nd floor ADU.

    0Reply
  • Russell W.
    Rental Property Investor · IL · Member since 2015 · 165 posts · 107 votes
    5y

    One big thing to consider is that you'll need to run new water supply to the coach house, as well as new sewer lines away from the coach house to the street. That all needs to be below frost depth of 42", so it's no small job. This would all be in place already for a basement unit, you would just be tapping in to route new lines. Depending on what Evanston allows/doesnt allow, the coach house may require it's own separate metered supply (i.e. you might not be able to take it off the existing building supply). Just something to consider as you're weighing your options 

    1Reply
  • Andrew Holmes
    Rental Property Investor · Chicago, IL · Member since 2015 · 275 posts · 271 votes
    5y

    Be careful with Evanston. Evanston is a great place to live but not the friendliest place to do anything. @Russell W. pointed out a few things like. You may have to bring a wholes new waterline with a larger diameter line. Gas and other considerations. Also the building codes. 

    At that point how does it have an impact on taxes because you are going to have to submit plans and the whole bit to the city of Evanston. I would run all those numbers and talk with an architect that is familiar with Evanston and the codes. 

    1Reply
  • Svend W.Pro Member
    OP
    Member since 2018 · 78 posts · 31 votes
    5y

    Thanks, Andrew, Russell. Yeah, I really like the coach house idea, but those factors do give me pause. 

    I'm looking at this company, which I guess specializes in this kind of work in Evanston.
    https://evanston.coop

    0Reply
  • Andrew Holmes
    Rental Property Investor · Chicago, IL · Member since 2015 · 275 posts · 271 votes
    5y

    If you can make the numbers work. Seems like they are very professional.

    0Reply
  • Jonathan Satizabal
    Investor · Chicago, IL · Member since 2016 · 80 posts · 90 votes
    5y

    I would estimate the cost of a garage/ADU at 150k-200k. I don't know if it is worth it from a investment stand point. It my pay off with an added appraised value down the line. I would ask if the ADU would increase the value of your property by at least 200k? I thought I read that rents were going to be capped for ADU's in Chicago at about 1200 a month or only some ADU's would be approved only as affordable rental units based on an area's median income. In Chicago they cannot be used as short term rentals or Airbnb's. I'm not sure what Evanston is doing.

    If you are looking at it as an investment, I would say take your 150k to 200k and invest it somewhere else you will probably get a better return with less work and less risk. I think the best ROI for an ADU is in a basement or attic unit. If you have a large property maybe look into a prebuilt or modular home that you can just drop on your land, or if you are handy you can build one yourself.

    2Reply
  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Svend W. - I'd be leaning for the coach house, but am unsure what exact zoning restrictions would be. Does the new ADU ordinance apply to Evanston as well? I thought it was specific to Chicago?

    My personal opinion is to always spend the extra money now knowing that real estate is a long-term play......ao far, waiting for that delayed gratification has paid off.

    Plus, if you did the coach house now you could always finish off the basement now and have an illegal

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    0Reply
  • Svend W.Pro Member
    OP
    Member since 2018 · 78 posts · 31 votes
    5y

    Yes, Evanston and Oak Park recently approved similar ordinances.

    Good points for both views. 

    I may not necessarily be maximizing ROI, but I lean towards Jonathan K.'s approach. Especially given that I expect to hold this property long term and am in an area with solid demand.

    As a parent, I love the idea of the flexibility of a coach house.

    It also adds relatively affordable new housing—it's interesting how ending the long-standing ADU ban has been championed by Chicago anti-poverty organizations—which appeals to my values.

    I’ll update this thread later when there are additional developments for others interested in this approach.

    Thanks 

    0Reply
  • Jonathan Satizabal
    Investor · Chicago, IL · Member since 2016 · 80 posts · 90 votes
    5y

    @Svend W. 

    I thought about applying for a coach house over the garage for my place but the numbers didn't make sense. 

    However, if I considered it as extra space for my family then it starts to look more interesting. You could consider moving my parents in if they needed a place at some point, if you have kids going to college locally it might be a good option for them to have their own space or even a guest house for family and friends when they visit. When you retire you could rent it out to supplement your income and add value in the long term. I think that makes sense. 

    For people that are looking to add some income in the short term, unless the structure is already there, I don't think it's the best option.

    0Reply
  • Svend W.Pro Member
    OP
    Member since 2018 · 78 posts · 31 votes
    5y

    Well, whatever its merits as an investment, it looks like the coach house is not a good fit for me right now. In my case, the new loan would be too large a percentage of the ARV for comfort, especially given all the unknowns.

    Maybe it would work for someone with more equity.




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