ADUs and Property Values

[Michael Tyler]

Short version: We hope to convert our garage to an apartment for our sick parents. But for same reason (sick parents) we might sell in a few years. Need to convince the family that sacrificing a garage to gain an apartment would add to the property’s value, not diminish it.

Long version: We have a 2-car garage with a 300sq ft bonus room above it. Adding stairs and a couple bathrooms makes it a 1-2br apartment for our parents (and potential rental income later). The wildcard seems to be how much the property would appraise for after losing the garage. The family won’t want to drop 50-150k on it if the property value doesn’t increase in kind. 

It's currently a 2500sq ft SFR with 4br+bonus room and 3 baths. After conversion it would be a 2200sq foot 4b/3ba plus a small 2b/2ba apartment. Zillow calls the value $730k currently.

Would losing the garage but gaining the apartment add 50-150k to the market value of the property? City is Anaheim.

[Tyler Hungerford]

@Michael Tyler, adding additional square footage will absolutely add additional value to your property. Because ADUs are a newish class of property, I would think that an appraiser would look at your property and consider it 2 houses on a lot once converted. Most two houses on a lot sell for a lot more than the normal SFRs in a neighborhood. Plus, it would be a great rental property to have in your portfolio. 

Let me know if you want to talk more in depth about this. I've helped multiple clients with ADUs and small multi-family projects. I'd be happy to answer any questions you have.