In-Law Suite/Apt Trend ??

Question

Hi All,

I'm looking to brainstorm with the BP community on something I experienced this past year on the real estate brokerage side of my real estate obsession.

The situation:

I represented a client who was selling a home with an in-law suite/apt in a blue collar town 4 miles north of Boston, MA. Typical basement 1 bed in-law apt with separate entrance and private driveway. Upstairs was a move in ready cape with modern appliances. Showed really well.

This little listing had the most foot traffic in my career. All because of the in-law suite. 75% of the foot traffic was represented by younger baby boomers (50 - 55) who were willing to sell their home along with a parents to purchase this one. Majority passed because the apt was outdated and not up to the standards of their parents wants. i.e. High ceilings, full sized windows, good light.. basically they didn't want to feel like they lived in a basement.

My Question:

Is this a profitable flip Niche? Every person I talked too said their families couldn't afford nursing home prices should that day come and wanted to proactively look for places safe for Mom & Dad to carry out their senior years while not physically living in their own personal space.  Should we just give them what they want? Build new homes or reconstruct our flips to fit their needs? i.e. Full Sized apts with private access and updated senior friendly amenities? Would buyers pay a premium for this option?

Could this be a new trend for home builders or flippers in blue collar communities where nursing home care may be out of reach? Would you explore this or pass? Why or Why not?

I feel like there is an opportunity here. Am I crazy? Thanks in advance! - Jim

Account Closed · Answer

It depends on the jurisdiction for sure.  When I lived in Davis, CA, the town was so desperate for additional student housing, that they changed the rules and encouraged people to convert their garages, etc., to be used as rentals, with the students in mind.

Also, I've found in CA that in-law apartments are normally allowed for family members.

As a senior now, myself (59), I can tell you there is a great need for what you're talking about.  Go online and google for forums where people talk about retirement or caregiving.  There are a lot of people out there needing what you are talking about.

Plus, if it was in an area where housing is needed and the in-law can be rented out (like in Davis, CA), you could use it for family or as a rental.

Ceril S. · Answer

I agree with @Colleen F. -part of the reason we made the in-law addition in the first place was because so many places that had an extra apartment claiming mother/daughter had the smaller apartment either upstairs or with steps to the bathroom  (in the case of a basement). Since we had built it out ourselves we had the luxury of making it handicap accessible all on one level.

Colleen F. · Answer

Generally, in towns I have lived in an in-law could not have a full kitchen with a stove. Something about fires. short of a stove it was fine.  I did have another investor who had to hide their fridge because the inspector didn't want to see one in the basement.  In any case there is a market not just for parents but live in caregivers for older people or nanny's.    A separate suite helps but the basement is not a popular option for older people if it is below grade.  One of the things I would keep in mind for these setups is  the bath. The bathroom it needs some space if it will one day accommodate someone assisting the aging parent.  I have been in too many houses where that was really tough.

James Morrison · Answer

Wow,  Thanks for all the quick replies. I had my clients remove the appliances from the in-law apt so it wouldn't cause any red flags with the appraiser. She actually thanked me when she came by saying it makes her job easier.

We are in the same boat here in MA. The in-law has to be shown it's for family use and not income generation otherwise zoning and tax codes change for the owner.

I don't think its viable for every flip or new construction project but if a plot of land allows for a walkout basement it will be hard for me not to consider it. I feel shifting demographics show a need for this.

@Pat L. This home was in a flood zone and also sold far faster than its surrounding competition. Will check with my lawyer to see how towns expected this to be handled.

Ceril S. · Answer

As others have said this would depend on your area.  One of the houses that I sold in the past we had added an in-law apartment that was beautiful.  We had to notiify our neighbors and go to a hearing with the town to have an exception made to zoning.  It was only approved because it was for my aging in-laws and because it was not obvious from the street that there was an extra apartment.  When we sold that house there was a bidding war with the winning bid coming in at $25k over our asking price.  (Granted this was in 2008)

As a business model - I'm not sure how it would work because of zoning.  However, during our hearing with town, we had to present a case that the apartment was"removable' and able to be used as part of the single family home.  We told them that the kitchen would become part of a "great room" as a wet bar.  I suppose you could call it something else in the plans "2nd master suite"? or family great room with wet bar? The small stove is about the same size as a wine fridge.

Pat L. · Answer

It's a definitely a selling point up here, where many of the parents/in-laws are snowbirds & arrive back in time to keep the grandchildren occupied during the school summer break.

We had two homes in our street selling recently. The home with the in-law setup went in a week while the other lingered for several months. We are seeing a lot of new builds with that option expensed into the build. But they are predominantly ground floor elevations rather than having them negotiate stairs to a basement or upper floor unit.

Kevin Dickson · Answer

Most zoning laws in most cities do not allow accessory dwelling units, (ADUs) in neighborhoods with single family zoning.  If your local jurisdiction allows it, I think it is a great business model.

Denver, for example, doesn't allow you to add external stairs to a basement.  This policy is in place apparently because they believe you want to add an illegal ADU.

Denver will generally let you add the second kitchen if you say it's for a family member.

Personally, I think all those laws should be repealed.