Should You Add a Granny Flat?

Since California passed several new laws in early 2020, it has become easier than ever for California homeowners to build “granny flats,” also known as accessory dwelling units (or ADUs).

These “granny flats” can function as short-term or long-term rental properties, a guest house, home office, or as a secondary housing unit for grown children or aging parents.

As of February 2020, one in six Americans lived in a home with 3 or more generations of family members. That number is projected to increase.

As more Americans live in multigenerational homes, it may make sense now more than ever to consider adding a granny flat or ADU to your property. These may even prove to be a long-term economic solution to inventory shortages across the country. The pandemic renewed interest in these as well since a backyard unit could generate passive income at a time when many families were struggling.

Regardless of what you use it for, ADUs can be a valuable addition to your property, especially if it means providing space for a family member or as a rental property.

How to Use Your Granny Flat (accessory dwelling unit, ADU, or tiny home):

1. Elder care: Many use a “granny flat” for exactly its name: as a tiny home for aging family members. The American Council of Aging states that, “the nationwide average daily cost for a shared room is $255.” That equates to a national average of $82,125 a year. Costs for private rooms are considerably higher and may not even be covered by Medicare or Medicaid. A granny flat would help you to keep your elderly relatives close and provide them the type of individual care that they would not be able to get in a nursing home. Plus they would also be able to keep a degree of autonomy.

2. Apartment for adult children: With rising unemployment and school debt, providing your adult children with affordable housing could help them save money until they can afford to get out on their own. If you have a child that isn’t capable of living outside of the home, if they have developmental or mental health issues, then an ADU would also be another way to give them a chance for independence while still being close.

3. Home office or studio: Many companies reacted to the pandemic by choosing to go remote, and many have chosen to stay so permanently. With kids out of school and adults working from home, many realized that their homes were not built for remote working life. An accessory dwelling unit or tiny home in the backyard can function as a home office, a place you can actually still “get away” to. It could also be your art, music, or recording studio, a place for your hobbies or to relax that is still separate from your main home.

4. Guest house: If you often have friends or family members staying at your home, a tiny home could offer an attractive alternative to trying to figure out who is going to take the downstair’s couch and negotiating who has what bathroom when. An ADU could give your guests privacy while also making sure you are less stressed.

5. Rental: One of the most attractive aspects of an ADU is its potential for passive income, but it’s all about your comfort level. For a long-term rental, you would need to function as your tenant’s landlord and have them sign a lease. If you decide to do short-term rentals instead, you could list it on popular sites like Airbnb or VRBO. Be aware that being a short-term host would mean that you would have to pay lodging taxes . If necessary, you could also choose to move into the ADU yourself and rent out your actual home!

Granny flats are an attractive investment for whatever you chose to use it for.

If you’re interested in exploring what it would be like to have one in your own backyard, check out the Ohana AR app. The app is simple and easy to use. You can view multiple ADU and tiny home configurations and sizes, select models, and then place them right in your own yard. From there, you can view different plans, models, and finishes and get informed about what exactly will work for your property.