Accessory Dwelling Units(ADU'S)

Dated: November 3 2021

Views: 33


Topic: Short-Term Rentals Trend Upward, But At What Cost to Neighborhoods?


There’s a trend happening in Colorado housing, that isn’t so much about your house, but more about your property and what’s around it. What we are talking about are Accessory Dwelling Units, also known as ADUs, whether made into a home for inlaws, an office, or as a short-term rental, and they are on buyers’ wishlists now more than ever before. These ADUs might be backyard cottages, converted garages, or an extra unit added to your house. While the uses for them vary, agents agree that ADUs are hot. According to a recent survey from the real estate experts at HomeLight, 34 percent of realtors nationwide said that they saw more requests for properties with ADUs in their markets. In our Mountain region, this number is even higher, as 47 percent of agents surveyed said they’ve seen a recent increase in ADUs in their markets.


However, while ADUs are popular now, agents are talking about whether they are good for neighborhoods and home values in Colorado, especially when they are used as short-term rentals, such as vacation homes. 


In favor of stand alone units

Taking advantage of extra real estate on your property by adding an ADU can be a a worthwhile investment as a rental property but how you structure it matters. The most common types of ADUs in our markets are detached (as 40 percent of agents shared), or attached (as 35 percent shared), as opposed to a garage conversion. Whatever you pick, creating a small home with its own entrance is a strategy that agents are talking about across the country for ADUs. This will make your tiny house easier to rent, which can make your property more desirable, and give you extra income. Agents in our region shared that they are seeing more people opt for short-term rentals (as 58 percent of agents shared in the survey) rather than longer-term (27 percent) for their ADUs. Along with this shift, agents shared that if an ADU is in a neighborhood with a lot of short-term rentals, it might bring the price down — to 13.3% less. That means that it might be better to opt for a longer-term rental, but again every neighborhood is different.


Pay attention to details

Whether you decide to go with a short-term or long-term rental, there are some ways to up the value of your ADU. Materials and design matter. Some of the top features that agents are talking about to increase resale value are: a closed off space for a bed (44 percent), use of high-end materials like granite (48 percent), or universal design (36 percent). With these upgrades your ADU could increase the resale value of your home while also setting you up to earn more in rent every month. No matter who you are renting to, these updates can get you ahead. 


Make your ADU work for you

With Colorado as a popular destination for winter sports, there is some merit in considering using an ADU as a vacation rental. On the other side of the coin tourism boosts the economy  and a vacation rental might bring in more every month than a long-term rental. The best way to know how an ADU might add value to your property is by talking with a real estate agent. 


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Patrick Muldoon

I have many interests and hobbies to supplement my busy career in real estate. Although I enjoy my work I also enjoy finding free time to enjoy the most important things in life. This includes being w....

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