Will adding Mother-in-law suite retain value

[Brad Tracy]

I am in a position where adding a mother-in-law suite to my primary residence in the Pickerington area seems very likely. I have attempted to find comps in the area and have not found any, I am wondering if that's because it's a bad idea. If there is anyone with experience in the area with any input for me on how an ADU will affect the property's value and ability to sell that be appreciated! Thanks!

[Dan H.]

Quote from @Brad Tracy:

I am in a position where adding a mother-in-law suite to my primary residence in the Pickerington area seems very likely. I have attempted to find comps in the area and have not found any, I am wondering if that's because it's a bad idea. If there is anyone with experience in the area with any input for me on how an ADU will affect the property's value and ability to sell that be appreciated! Thanks!

My market is southern Ca which is very different than Columbus but I suspect is similar behavior on adding an ADU.

An ADU addition in a SFH zoned area in my market adds significantly less value than the hands of cost of adding the ADU. There are various reasons. Some include 1) there are many more owner occupied home buyers than investor RE purchasers 2) adding small units in small counts is the most expensive development 3) it detracts something from the primary even if it is just yard.

Assuming your market is similar, I would add an ADU not primarily as an investment. If you have elderly parents and want them close to you but having their own space. Similar for adult children still finding their way. These are great reasons to add an ADU even if it is not a great investment.

Good luck

[Bruce Woodruff]

Like @Dan H. says, there's usually not a great deal of return on an ADU. Add one if you need it, but otherwise, if you are looking for ROI, there are better ways to do it. I'd rather use the money to buy another property(s).....

[Alecia Loveless]

@Brad Tracy The most recent estimate I got to renovate an existing space to a studio apartment was $120K. The return on the investment made it a foolish option.

I think in most markets adding an ADU simply as an investment is a bad option. There are some markets that it makes since like in California or where there are higher rents.

As others said if you have a personal use for it then do it. Otherwise consider spending your money buying an additional property.

[Remington Lyman]

Quote from @Brad Tracy:

I am in a position where adding a mother-in-law suite to my primary residence in the Pickerington area seems very likely. I have attempted to find comps in the area and have not found any, I am wondering if that's because it's a bad idea. If there is anyone with experience in the area with any input for me on how an ADU will affect the property's value and ability to sell that be appreciated! Thanks!

In general, adding a mother-in-law suite is not going cost more to do than the value it will add to your home in Ohio

[Brad Tracy]

Thanks Remington. Your answer seems to counter other comments. Being local to Ohio, I'll assume your more familiar with the market and that maybe the ROI won't be great but I may at least recoup the investment? As this isn't an ROI move but a family benefit that sounds great.

[Remington Lyman]

Quote from @Brad Tracy:

Thanks Remington. Your answer seems to counter other comments. Being local to Ohio, I'll assume your more familiar with the market and that maybe the ROI won't be great but I may at least recoup the investment? As this isn't an ROI move but a family benefit that sounds great.

 My thoughts are in line with the others. I would do it if it is going to make your life more enjoyable. I do not think you are going to recoup the investment from a monetary investment

[Bryan Waters]

I love the ADU play. It just increase different RE strategies you can take advantage of and it always adds value! But it has to be in line with your market and some demands. For example, I added an ADU and decided to furnish the unit and target traveling nurses. It does amazing because there's good demand in that area with 3 large, very nice hospitals close by. Check out furnished finders to see if there's any active comps and what they are looking to get in your area.

[Dan H.]

Quote from @Bryan Waters:

I love the ADU play. It just increase different RE strategies you can take advantage of and it always adds value! But it has to be in line with your market and some demands. For example, I added an ADU and decided to furnish the unit and target traveling nurses. It does amazing because there's good demand in that area with 3 large, very nice hospitals close by. Check out furnished finders to see if there's any active comps and what they are looking to get in your area.

 >it always adds value

Have you received an appraisal that reflects this? In general, in most markets they add many thousands less than the hands off costs to add the ADU. I would be surprised if this is not the case in the low cost Midwest market.

Add in that money goes out many months before any generated income, the worse financing options versus purchase financing, the detraction of something (even if it is just yard space) from the primary unit, the work involved even hands off is at least as high as a BRRRR but a brrrr can provide an infinite return.

In general it is much better to purchase a property with an ADU. The buyer had someone else pay more to build it than the value added, they had someone else do the associated work, they can get home purchase financing, they do not need to wait months for the ADU to be constructed.

Best wishes

[Andrew Syrios]

Generally adding an ADU isn't worth it but the exception would be in high-density areas with housing crises'. These cities are usually anti-landlord but they made this one exception. And given how high demand is there, I think those areas can (sometimes) make sense to build ADUs or mother-in-law units.

[Jimmy Lieu]

Quote from @Brad Tracy:

I am in a position where adding a mother-in-law suite to my primary residence in the Pickerington area seems very likely. I have attempted to find comps in the area and have not found any, I am wondering if that's because it's a bad idea. If there is anyone with experience in the area with any input for me on how an ADU will affect the property's value and ability to sell that be appreciated! Thanks!

Hi Brad! Did you make sure to reach out to the permit and zoning office to make sure you'll be able to follow all the rules and the mother in law suite will work for your location? I would recommend making sure to ask your realtor about other nearby comps and see if they have ADUs. If not, then probably not the best ROI.

[Bruce Woodruff]

Quote from @Andrew Syrios:

Generally adding an ADU isn't worth it but the exception would be in high-density areas with housing crises'. These cities are usually anti-landlord but they made this one exception. And given how high demand is there, I think those areas can (sometimes) make sense to build ADUs or mother-in-law units. 

I agree....but the OP should still bear in mind that these Blue cities will still have very tenant-friendly laws in place, so that should be weighed into the decision as well....IMHO.

[Andrew Syrios]

Quote from @Bruce Woodruff:

Quote from @Andrew Syrios:

Generally adding an ADU isn't worth it but the exception would be in high-density areas with housing crises'. These cities are usually anti-landlord but they made this one exception. And given how high demand is there, I think those areas can (sometimes) make sense to build ADUs or mother-in-law units. 

I agree....but the OP should still bear in mind that these Blue cities will still have very tenant-friendly laws in place, so that should be weighed into the decision as well....IMHO.

Definitely true, although I guess I could note there is one other good thing about blue cities and that is that they make it very difficult to build and thereby prices for existing buildings tend to rise as do rents (which ironically makes them less affordable and want to pass more arduous anti-landlord laws).