Does a Mother-in-Law Suite Add Value to Your Home?

Does a Mother-in-Law Suite Add Value to Your Home?

Whether seeking to develop an accessory to your property or to accurately price it when selling, it's important to know exactly how much value the addition of a mother-in-law (MIL) suite, also referred to as an accessory dwelling unit (ADU), impacts your house.

Why Add a Mother-in-Law Quarters to Your Property?

Considered an affordable and innovative housing solution in certain neighborhoods, a number of homeowners greatly desire to add at least one ADU to their property to add value to their property, house extended family members or for rental income.

Beyond small above-garage apartments, these spaces, which can come either detached or attached to the house, have many uses and continue to skyrocket in popularity.

The Value of ADUs, According to Research

Historically, the cost of implementation vs. return on investment (ROI) from an ADU has proven a significant source of confusion and frustrated real estate experts. As a Las Vegas real estate agent, I can say that much of the cause of these issues stem from the shortage of suitable comps.

Not only is there no golden formula, but the majority of houses that are lucky enough to support ADU as an expansion are worth far more than they get credit for.

Using a method to appraise income capitalization, a study published in the Appraisal Journal underwent a theoretical analysis to determine the value of a set of properties with ADUs.

Do Mother-in-Law Units Add Value?

These researchers estimated the property values with mother-in-law units to be anywhere between 7-10%, or between $20,000-$30,000 higher than more recent prices averaging near $400,000.

How ADUs Are Factored By Modern Appraisers

However, this exclusively applied to those that could be legally rented out. If these units are not fully permitted, the approach could be observed as misleading.

Before building, consider the value that such a space will bring to the home. Even without receiving 100% back on a resale, having family members within arm's reach, extra storage, or an extra revenue stream may be more valuable. Furthermore, weigh the investment against a confirmed total of the specific features that need to be included with the expansion.

Searching for a home with mother-in-law suite? Check out Las Vegas homes with mother-in-law suites.

How Much Does It Cost to Build a Mother-in-Law Quarters?

Depending on the current layout of the home, local construction costs, and desired features, typical suites are estimated from anywhere to $5,000 up to $100,000. The more intense an addition is, the more difficult it becomes to calculate the ROI.

Rental income can be utilized for either short-team leases or long-term tenants through services like VRBO and Airbnb.

How Can A Home Containing An ADU Be Sold?

When selling your home with a mother-in-law suite, to capture the proper buyer that's willing to pay more for the inclusion of such an expansion, the details and utilization need to be made clear. You need to be sure that no assumptions are made upfront with respect to who should buy the property.

Despite the fact that some religious or ethnic cultures commonly embrace housing that spans multiple generations, you should not market specifically to such groups under the Fair Housing Act. This protects against discrimination based on multiple variables, including race, national origin, gender, disability, color, and religion, to name several.

Conclusion

Throughout this article, we’ve discussed how adding a mother-in-law quarters or ADUs can impact the value of your home and property when selling. If you have questions about selling your home with a guest house, feel free to reach out!

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