Home Additions – Turn Your Home Improvement Into a Money Maker
Can you actually earn money from a home addition? Over the years of working with owner builders, I’ve often been asked about adding a rental unit. I get this question more often during economic downturns. I guess that is understandable.
Does this make sense? Is it doable? Let’s explore the idea here to see whether or not this is a good strategy for you.
What’s Your Real Goal?
Is it for a little temporary income? If so, is there a way you could rent out a room instead of building an addition? If it’s an ongoing need and a permanent solution, will you want separate entrances, separate kitchens and private parking areas? Will the addition have any access to the rest of the house?
Once you’ve answered a few preliminary questions like these, it’s time to get some facts about what is legal to do in your area. There will no doubt be some restrictions.
Why Restrictions are Imposed
Most every city, county, state/province, etc. has restrictions or limitations as to what you can do with your property. The reasons for this are varied but they center around safety and money.
First, the safety. Building authorities are often responsible for limiting the number of families living in a house as well as the number of houses or housing units on a particular lot. This falls under the local codes. Fire prevention, health services, water and power, etc. all have roots in safety.
Now for the money issue. In order to provide the community with their services, charges are levied for permits and fees at the point of construction (or applications) so the authorities can have a handle on who’s living where and what services might be required and the costs to provide them.
Ways Around the System?
If your property is zoned for a second home, then you’re probably in good shape. Maybe all you want, however, is to add onto the home so you can rent out a room, bathroom and a kitchenette. You’re hoping to add some income for now and increase the value of your home in the long run.
Will the code allow this? Very often there will be issues with adding another kitchen. Kitchenettes could be okay but you’ll have to check with your building authority. Some people add kitchenettes after the construction is done. I’m not suggestion you do this however.
Getting around the system can be asking for trouble. The longer I’m in the business, the more I see that most of the requirements are for safety and it’s good to pay attention.
Get Some Advice and Guidance
If after checking the requirements you find that everything lines up legally, then the addition of a rental unit (or rental space) can be a good idea. Be sure to examine the costs vs. the income. In general, the longer you intend to rent out space, the more it can make sense economically. And be aware that the addition may or may not improve the value of your home upon resale.
A major project like a home addition is best accomplished with help. Get some professional advice. I prefer the owner builder approach with the help of a home building coach.
And be sure you’re committed before going through with it. Do your homework!
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