MIGHTY BUILDINGS BLOG

ADUs are the Future of Real Estate Investing

A general interest in real estate investing is becoming more popular with everyday individuals who have no previous experience in the real estate market, and it is easy to see why. Right now, there are plenty of opportunities for investors to enter the market in several different ways. With the promise of tremendous payouts, more people are exploring this avenue.

Within the world of real estate investing, there is a growing interest in accessory dwelling units (ADUs) alongside traditional homes. These exciting units offer several benefits for investors, making it fairly easy to see why so many people are choosing these home units for their investment process. In this article, we will explore ADUs and what benefits they can offer investors.

What is an ADU?
An accessory dwelling unit (ADU) is a term that refers to a secondary housing unit. These units are generally smaller than traditional housing, and they notably tend to share a building lot with a much bigger home as well. These units exist on the property and can be completely self-sustained.

Like traditional housing, accessory dwelling units offer complete comfort, particularly for small families or couples that are just beginning to start a family. Though these offer clear benefits for the owner of the larger home, they also offer some very obvious benefits for investors as well, particularly those who are looking to enter the real estate investing world for the first time. These approachable home units can offer tremendous payouts with the right strategy.

ADUs as Investments
Having a secondary home on your property can come with all kinds of great benefits, but for investors, these units offer something truly special. Let's explore how these units come together to create a space where investors can thrive.

To Earn Additional Income
The first and most obvious benefit when it comes to investing in an ADU is the income potential. These are entirely separate housing units on your property, which means that they can be rented or sold to create a viable revenue stream.

As long as you are within your legal rights and understand the laws surrounding secondary housing units, you can offer up your property’s ADU as a living space for another individual. Renting these homes out is a very common option because there is a very high need for housing right now with the market. In many ways, it is like owning two separate properties, one where you can live and another that you can rent out. 

Renting out an ADU is a wonderful way to make additional monthly income. As long as you can find a tenant, you can create this revenue stream and start making money. In some ways, an ADU can pay for itself with enough time. After that, you will be making consistent revenue as long as you have a tenant staying in the unit.

There is a Need for Housing
A great reason to invest in ADUs right now is the fact that there is a significant need for housing at this time. More people are looking for single-family units to rent, and ADUs can be the perfect option. Since there is such high demand in the market, this is one investment that is almost guaranteed to pay out in the end, making it a fairly welcoming choice. If you want to capitalize on that housing need, ADUs are a great avenue.

Fast Turnaround Times
Having a traditional house built can take a very long time, and that isn't ideal for investors. It makes investing in a potential home to rent out or sell a very long game that might not offer a return for years in some cases, which is less accommodating, particularly for new investors.

ADUs are small and can be made with different materials than traditional homes. While it won't feel any different for your tenants, it does mean that you can invest in an ADU and have it ready to rent out sooner rather than later. Anyone who wants to build their revenue stream quickly without investing in a preowned home can benefit significantly from following this approach.

Lower Cost
Given their small size, ADUs can come at a lower price than a traditional home might. Though this isn't always the case, it certainly can be, which can lower the overall risk associated with your investment. More importantly, it is significantly more approachable for new investors since the amount of money that you will need to invest will be much lower in a lot of cases. This makes it easier to jump right in and get started.

More Opportunity
If you are already established in the investment market and are looking to invest in property with a higher payout, choosing a property that has an on-site ADU can be a wonderful decision. More people are developing an interest in having these secondary units, particularly for relatives or family friends. This also increases property values up to 30%.

Choosing a property with an ADU allows you to automatically charge a much higher rate for the property because it will technically have two homes. This is an ideal option for renters who might want to remain close to older relatives or who have older children that would like their own space. Either way, when you invest in a property with an ADU, you will be able to market that property better and ask for a significantly higher starting price. It's a great way to get an extra boost.

Final Thoughts
Accessory dwelling units are a great way to maximize on space, which is always good for real estate investing. These units give you more to market so you can always make a higher return than you normally would. With their affordability, fast build times, and ability to be fitted with all of the necessary fixings of a traditional dwelling, ADUs offer investors a great way to make a little extra money. Before you choose to have a house built, ask yourself if an ADU might be a better option instead.

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