Mother-in-Law Suites: Should You Add One to Your Home?
These additional living spaces could give you the guest space or rental income you're looking for.
Some mother-in-law suites are a detached structure that is fully functional on its own.(Getty Images)
A mother-in-law suite is a private living space that is either attached or separated from a larger home but on the same property. As the name suggests, it can be used by the parents of the homeowner, allowing multiple generations to live on the same property while maintaining privacy and separate spaces.
Mother-in-law suites may also be called granny flats, secondary suites and guest or pool houses. They all fall under the more technical term of accessory dwelling unit, or ADU, which means the space is considered its own living space, complete with a separate entrance, full bathroom and kitchen.
Building an ADU or mother-in-law suite isn’t cheap, but there is potential for it to add value to your property, as long as you consider all the additional details involved.
Here’s what you need to know about mother-in-law suites and ADUs:
ADUs and mother-in-law suites come in a wide variety of styles. Here are some of the common types you’ll find, all with a separate entrance from the main dwelling:
- Finished basement.
- Attached addition to the home.
- Apartment above garage (attached or unattached to the main house).
- Converted garage (attached or unattached to the main house).
- Detached structure that is fully functional on its own (referred to as a casita in some parts of the U.S.).
While a mother-in-law suite may imply a single reason for the additional living space, there are others that drive people to seek an ADU option.
“The two biggest motivations are rental income potential and multigenerational housing flexibility,” says Kol Peterson, an ADU expert and author of “Backdoor Revolution: The Definitive Guide to ADU Development,” based in Portland, Oregon.
Common reasons for building an ADU or buying a home with one include:
- Multigenerational housing as a solution to child care or cost needs.
- Multigenerational housing as a cultural norm.
- Rental income opportunity.
- Space for regular visitors.
- Space for at-home work or hobbies.
Multigenerational housing is common among many cultures throughout North America, Europe, Asia and beyond. Adult children may be more likely to stay in the home longer, and aging parents may move in with their child’s family. Multigenerational options are also increasing in popularity as expensive housing keeps adult children at home longer, and as people seek alternatives to assisted living or nursing homes for aging parents.
In some cases, the suite is intended to be used by grandparents, but for extended visits as opposed to full-time living. “The grandparents plan on spending a month, two months here a year,” says Kerron Stokes, a Realtor with Re/Max Leaders in Centennial, Colorado.
In any of these situations, the separate entrance and living space affords the adult generations privacy and the ability to have time apart, while making time together easy and frequent.
Other uses, of course, can help a homeowner cover the cost of the mortgage. ADUs can be used as a source of rental income, either for long-term tenants who sign a lease or for short-term leases through services like Airbnb or VRBO.
If you’re planning to build a mother-in-law suite on your property, don’t expect to do it for cheap. In a study of the typical cost of ADU construction, Peterson notes the average detached new construction ADU costs $180,833, while the average basement ADU costs $185,833 and the average garage conversion is $142,000, based on reported numbers from 50 homeowners who built an ADU.
In addition to the cost of construction, the red tape associated with rezoning a property or obtaining the right permits may be prohibitive to your timeline and wallet.
“It used to be if you wanted to add a mother-in-law suite, you had to change your zoning,” says Kari Lundin, a Realtor specializing in the purchase and sale of duplexes with Keller Williams Realty Integrity Edina in Edina, Minnesota. She explains that a zoning change can be complicated, requiring a petition for change signed by neighbors and approval of the local planning board.
While some states on the West Coast and some cities in other parts of the country, including Minneapolis, where Lundin works, have passed legislation that makes it easier to either skip zoning changes or get new zoning approved, other parts of the U.S. still have plenty of red tape that can take both time and money to get approval to build an ADU.
Read:The Guide to Home Renovations. ]
An accessory dwelling unit of any form can add significant value to your property, but the increase varies widely based on where you live. If there aren’t many granny flats where you live, it can also be hard to have the property appraised to reflect the change in value because there aren’t other properties to compare it to that have sold recently.
“That would be like adding a 20,000-square-foot swimming pool to a property. The appraiser might say, ‘I don’t know that it would add value for anyone else, because I don’t know anyone who needs a 20,000-square-foot swimming pool,” Peterson says.
If you're struggling to figure out an estimated value of your property or seeking to convince a lender to finance your ADU construction, Peterson recommends factoring in the potential financial gain from renting the property. You may not be able to provide an appraisal showing value increase with an ADU, but you could show how rental income would make a positive impact.
Working with a real estate agent to find the right property can be helpful. Lundin specializes in working with buyers looking for duplexes, triplexes and quadplexes, often for investment purposes. She works with clients to make sure the potential cash flow lines up with the costs of the property – a detail she says buyers must consider when they're planning to live on a property and rent part of it to tenants.
To find a property where building an ADU is possible, Stokes recommends asking where ADU zoning is available. Many cities have specific zoning types designated to make it easy to construct an ADU, while others may have simplified the process of rezoning the property for the same purpose.
To capture the right buyer who’s willing to pay more for a mother-in-law suite, you have to be clear. “You have to be purposeful in marketing the space and its utilization,” Stokes says.
However, you want to be sure you don’t make any assumptions about who should buy the home. While some ethnic or religious cultures commonly embrace multigenerational housing, you can’t market specifically to those groups – doing so would be a violation of the Fair Housing Act, Stokes explains.
The Fair Housing Act protects against housing discrimination based on race, color, national origin, religion, sex, familial status or disability. The marketing of your home and ADU must be done carefully to ensure you’re not “inadvertently discriminating against the buyer in any way,” Stokes says, and he recommends working with a real estate agent who has experience selling such properties to make sure fair housing laws are followed properly.