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5 Reasons To Build an ADU on Your Rental Property

Dustin Edwards • February 7, 2024

An accessory dwelling unit (ADU) can be a great asset in developing your real estate portfolio or learning about the real estate industry. However, only a few people take advantage of ADUs' benefits. Not only are they a great source of passive income, but they’re also a great resource for individuals trying to get into the real estate industry without investing in a new rental property.


Below are five reasons you should consider building an ADU on your rental property.


Reason #1 Improved Property Value

An ADU can be seen as a safe investment. Building an ADU is seen as a reliable long-term investment. An ADU increases the living space of a property, and more living space means an increase in potential value. The potential increase to your property may vary based on the original size of the property, as well as the neighborhood. However, typically, people may see an increase in roughly 20% to 30% of the property’s value.


It's not only seen as a way to add value to your existing property, but an adu also has several versatile uses. They are often called a “granny flat” because they have been used to allow friends and family to live with you. However, if this isn't the case, you can always list your ADU as a long-term rental. 


Reason #2 Rental Income

Nowadays it's not uncommon for ADUs to be used as an additional rental income or a way to enter the real estate industry. This can provide you with a steady flow of income every month. When trying to see how much you can charge for rent for an ADU, you need to keep a few things in mind. While ADUs typically stand-alone and don't share walls, they are often priced like apartments. An excellent way to keep the rent competitive is to investigate how much apartments in or near your neighborhood go for. This can take some time to get right, though ensuring a competitive price is worth it as it keeps vacancies low. 


Reason #3 Using Unused Space

If the property you purchased happens to be in a large lot, why not take advantage of the space to build an ADU? In Long Beach, CA, the lot of your property needs to be a minimum of 5,200 square feet. The ADU itself can be 50% of the gross floor area of the primary dwelling or 800 square feet, whichever is less. An 800-square-foot ADU can accommodate a two-bedroom bathroom configuration. You can add features such as a private outdoor space and porch based on the rest of your property size.


Reason #4 Adaptability

An ADU is far more versatile than just a second house on your property. While you can build it and allow friends or family to live nearby, an ADU can also be built by converting a detached garage to save money on the build. Most people assume that the ADU gets listed and rented out. However, if the primary dwelling is significantly bigger than the ADU and you don't need that much space, why not live in the ADU and rent out the primary dwelling? 


This is where the adaptability of an ADU comes in. You can live in either residence while the other gets rented. Alternatively, if you purchase another home, you now have the option for two different sources of income. Finally, if you choose to live in the ADU, the main dwelling can be listed as a short-term rental on apps like Airbnb since ADUs don't qualify as short-term rentals in Long Beach.



Reason #5 Offset Living Expenses

Although building an 800-square-foot ADU can cost between $100,000.00 and $200,000.00 depending on the size if you're converting a garage and the configuration of the ADU, that being said, investing in an ADU can pay for itself in the long run. On average, the potential rental income you receive from the ADU is around $2,000, assuming it's a configuration with 800 square feet of living space. If you choose to live in the ADU and rent the main home, you can collect more rent. This is common for people looking to downsize after their kids move out or go to college.


An ADU is an excellent option for anyone looking for additional income. If you have an ADU you need help managing or are looking to
collect rent online, we invite you to call us today at (562) 888-0247 or fill out our Owner Application online.

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By Dustin Edwards December 19, 2024
If you're properties are suffering from lack of heating this winter, these 3 common issues could be the cause.
By Dustin Edwards December 12, 2024
Although Southern California’s winters are typically mild when compared to other parts of the country, tenants still value a warm home during the cooler months. Taking steps to maintain a comfortable living environment shows your tenants that their needs are being prioritized. This is crucial for tenant satisfaction, especially during the holidays. Below are three methods to help keep tenants warm during the winter season. Maintain Heating System It's required for landlords to provide rentals with a working heating system, however, it's not uncommon for these to fall into disrepair either because of lack of maintenance or negligence. Scheduling regular inspections and maintenance before the coldest weather can help to ensure the heating is reliable and efficient. Cleaning air filters, and checking for cold spots, or irregular noises can help prevent small issues from escalating into expensive repairs. Preventative maintenance can help to reduce the chances of inconvenient calls for emergency repairs. Being proactive with your maintenance can also help you protect your investment while earning goodwill from your tenant. Another factor that can affect your heating system is drafts around windows and doors. These drafts can cause your heating system to overwork which makes the system less efficient, and reliable and ultimately reduces the lifespan of your heating system. You can address this by inspecting the seals around doors and windows for gaps or cold spots. Replace worn-out seals and caulking where it's needed. Offer Smart Thermostats Consider providing your tenants with a smart thermostat for energy-efficient heating. This can not only give tenants control over their comfort, but it's also a great tool to reduce energy usage. By providing this upgrade to your tenant, you show a commitment to your tenant’s satisfaction which can in turn result in a long-term tenant. These kinds of devices definitely benefit your tenants, though they can also contribute to the longevity of your rental property as well. Additionally, you can give your tenant a smart thermostat as a holiday gift . This can show your tenant that you’re not simply collecting rent while protecting your investment. Reverse Ceiling Fans The direction in which a ceiling fan rotates is oftentimes overlooked, and it can have a great effect on the temperature of a home. A ceiling fan is typically seen as a way to cool down a home during the hotter seasons without using the air conditioning . Reversing the spin of a ceiling fan can help to circulate warm air more efficiently during the cold season . This is because warm air rises, and a fan rotating clockwise will push the warm air back down helping maintain warm temperatures. Most fans have a switch on the motor and it is easily accessible for most people with a step ladder. This easy adjustment helps reduce the need for your tenant to use the heating system. Tenants will notice a more consistent and comfortable temperature indoors. This should also help reduce costs on their energy bill. Reversing the rotation of the ceiling fans also takes some of the strain off of the heating system. This helps to ensure it operates efficiently for years by reducing the wear and tear on it. Taking proactive steps this winter season to ensure your tenant’s comfort demonstrates a landlord’s commitment to their tenant’s comfort. A comfortable tenant is a satisfied tenant , which can lead to a long-term tenant and steady rental income. Consider it a small investment for long-term success. If you need help keeping your rental warm or managing Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online .
By Dustin Edwards December 5, 2024
Discover 3 Gift Ideas for your tenants this holiday season.
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