BG, you can build a granny flat for about $200/sf. If you build a 550 sf guest house, that’s $110,000. Assuming a mortgage can be had a 5% (easy to get right now), that would give you a $590.50/month P&I mortgage payment. Add additional maintenance, tax, and insurance costs (~165/month), and you’re looking at somewhere around $755.50/month in additional expenses for the accessory dwelling unit (ADU). Around here, you can *easily* get $900/month for such a unit, so it makes sense for many people to do this. It just depends on whether or not one needs/wants to do it, and whether or not they have the money or equity in their existing home to use for the construction of the ADU.
City of San Diego limits companion units to 700sf. And there are limits based on lot size, parking, where on the lot it would be placed, etc.
You are right – it doesn’t pencil out from a strictly financial point of view – higher equity. But from a FAMILY point of view it can be a great solution. We were able to offer my inlaws over 5 years of independent living they would NOT have had if we didn’t build it. The nursing home costs would have been higher. And they had a better quality of life.
And – don’t discount the income it can generate when it’s no longer used by family. We’re getting a very nice rental income now. It was a factor that played into my ability to retire early.
If you look at it from strictly real estate financial perspectives – we have a long payback. But if you factor in nursing home costs for family members…. maybe not so much. And if you factor in the fact that we were able to do the right thing by my in-laws – that is worth a HUGE amount to me. For others, it might not have value.
How about just building an extension to the house with a bathroom. Then after the fact, close it off and add a kitchen. I don’t think that the code enforcement people would know.
problem is the improvements are not permitted and the neighbors might find out and rat you out.
I suppose if you’re discreet and plan to live there forever, then it’s not really a big deal.
On HGTV, there’s a show about people turning single family houses into several separate apartments in Canada. I guess it’s perfectly legal over there.
