Garage conversion into livable space – good or bad idea?
February 21, 2022
Written by Mary Van Keuren for Bankrate.com
You may have never heard of ADUs but we bet you’ve seen them. ADU stands for “accessory dwelling unit,” and these small living spaces go by many names. You may know them as in-law suites, granny flats, tiny homes, or more.
So what is an ADU? It’s a secondary living space that is placed on a lot that also includes a primary home, usually a single-family dwelling or sometimes a duplex. An ADU can be attached to that main dwelling, or it may be in a separate structure such as a garage. It is usually self-contained, with a kitchen, living space, bedroom(s), and bathroom.
ADUs have been around for a long time, but recently they’ve been receiving a lot of attention. One 2020 study suggests that their numbers grew by an average of 8.6% each year between 2009 and 2018, with the fastest growth seen in Sun Belt states like California and Florida.
What makes ADUs so popular?
ADUs are popular with older adults who are downsizing and want to live near their children but maintain their independence. With 54 million Americans aged 65 or older, this growing population demographic needs housing.
Zoning regulations, especially in crowded urban areas that lack housing options, are slowly becoming more favorable to ADUs, allowing them to play a role in the more effective utilization of home lots.
Prices on everything from food to car insurance are increasing, and homeowners can offset that by renting out ADUs to tenants.
The rise of short-term rental units, facilitated by companies such as AirB&B, makes urban ADUs especially appealing.
The cost of building or rehabbing space into an ADU is relatively low, making it a cost-effective option that also increases property value when the time comes to sell.
COVID-19 has driven many people to work from home, making office-based ADUs a hot commodity for workers who need a dedicated space at home, but away from the hustle and bustle of family life.
Of course, deciding to turn your garage into an ADU is a big decision, and there are numerous factors to consider. Here are some of the elements you might want to consider when turning your garage into a dwelling unit.
Converting your garage: Is your ADU legal?
As you probably know, adding a building or changing that building’s use — such as turning a garage into a living space — usually requires building permits and inspections to ensure all the work is legal and within the scope of local zoning and construction codes.
Whether or not converting your garage into an ADU is legal depends on where you live. Few states regulate ADUs at the state level, with California being at the forefront of those that do. The vast majority of states leave it up to local municipal codes to determine the legality of ADUs.
If you live in a zoned area, which includes most urban and suburban regions, your first stop when planning an ADU should be your local zoning office. They will have answers for you on the legalities of ADUs as well as any restrictions that may affect your project.
When ADUS is legal
Generally, if ADUs are legal in your region, that means you live in an area zoned for residential use. Even in areas where ADUs are legal, there are still typically rules regarding their construction. These are some common restrictions:
Usually, the number of bedrooms is limited to one or two.
A dedicated parking space for the ADU is often required.
The square footage of the ADU will often need to be a certain percentage of the footage of the main dwelling. For example, in Lincoln, Nebraska, an ADU can be up to 40% of the size of the main home.
Some jurisdictions require separate plumbing and electrical fuse boxes, others prefer that they be integrated into the main home’s infrastructure.
There are three types of use restrictions for most areas: some allow them to be used only for relatives, some allow long-term rentals, and a few also allow short-term rentals, such as Airbnb.
When ADUS is not legal
Although it’s a pretty common occurrence, it’s usually not a good idea to try to build or rehab an ADU without legal permission from your city’s zoning board. You may be able to fly under the radar for a time, but sooner or later your illegal ADU will likely be discovered and you may face fines and more.
In addition, you’ll want to be careful to understand any restrictions that are placed on ADU use in your area, including size and usage restrictions. If ADUs are only allowed for family members, for example, you could face fines and further restrictions if you put them up on Airbnb. Some regions require ADUs to be on a permanent foundation, as opposed to units that are on wheels. You may also find local law requiring minimum setbacks from property lines.
If you live in a rural area with few zoning regulations, you will still probably want to check with your local government on the advisability of placing an ADU on your property.
ADU-friendly state; ADUs are allowed in many municipalities, which have their zoning requirements. In Newton, the owner must live on-site; long-term rentals are allowed; ADU must be at least 250 sq. ft.
No state-wide legislation; some municipalities allow them; Cheyenne encourages ADUs up to 1,200 sq. ft. or 35% of the main dwelling size.
Budgeting for Pros vs. Joe
Once you have the necessary permits for your ADU and understand any restrictions, you’re ready to consider what needs to be done. If you are putting an ADU in an existing garage, you will probably have less construction, and at a lower cost, than if your ADU is going to be new construction.
Your final cost for an ADU will include many factors, including construction costs per square foot in your region, whether you are increasing the footprint of the garage — and thus need to pour a new foundation — and the quality of the materials you use. You may be able to save some money by handling certain tasks yourself.
A recent study from the University of California at Berkeley found that the cost of an average free-standing ADU in the Pacific Northwest was $156,000. Your own costs may be considerably less, depending on where you live and the complexity of your ADU, with $30-60K possible for a simple garage conversion.
Here are a few of the jobs you’ll need to consider, along with an idea of the technical knowledge needed to accomplish them.
Architect fees: If you hire an architect or engineer to give you blueprints for your ADU, you will likely spend several thousand dollars on their services. For simple ADUs, this may not be necessary and it may even be possible to find simple blueprints online for a much smaller fee.
Permits: Permit fees vary greatly depending on where you live, but should be taken into consideration when planning your budget.
Construction: This may involve nothing more than putting up drywall or finishing a ceiling. A talented amateur may be able to accomplish roughing in the dwelling unit’s spaces. On the other hand, if you’re creating a two-bedroom apartment out of double garage space, you may be better off hiring professionals.
Electrical: This is generally best left to the pros unless you have electrical experience, especially if the garage you’re outfitting does not have electricity currently.
Plumbing: This is another task that should be undertaken only by experts. Plumbing kitchen and bathroom facilities where none existed before is a complex task not suitable for most homeowners.
Interior and exterior painting: Can be done by homeowners with the time and patience for it.
Paving: Many municipalities require additional parking space for ADUs. To pave over an area of lawn would typically require professional equipment and expertise.
Roofing: Some ADUs require new roofing on an addition to the garage. This can be done by the homeowner if they have experience or by a professional roofing company.
Installation of windows and doors: If you are converting a garage to an ADU, you will probably need a new entrance area, and may be required to add additional windows to the structure.
Insurance: You’ll also need to take a look at your current homeowner's insurance policy, which will likely require an alteration or additional policy to accommodate your new ADU. It’s probably a good idea to speak with your insurance agent once you have planned the project but before you start it to determine what the impact on your home insurancecostsmight be.
Property value impacts
How does your ADU impact the value of your property? Considering the variety and range of costs associated with ADUs, it’s hard to put an exact number to this question. In fact, it may be a good idea to get the opinion of a local realtor about resale benefits before you build your ADU if that is one of your concerns.
In general, however, ADUs, when properly built and according to local code, provide a positivebenefit to your property value. This is especially true in regions that allow ADUs to be used for rental purposes since these allow the homeowner to recoup some of the cost of building the ADU with monthly rental payments.
A study of ADUs in Portland, OR, indicated that sale prices on homes with ADUs have priced an average of 7.2-9.8% higher than those without; and that ADUs contributed an average of25-34% to a home’s appraised value.
Keep in mind that if your ADU is built in your garage, thus costing you the use of this space for your car, it can decrease your property value somewhat. One appraiser suggests that a functional garage adds between $5,000-25,000 worth of value to your home. Losing that value may indeed be offset by the value of an ADU, but you’ll need to crunch the numbers to find out how much value your ADU will bring you.
ADUs: The short game vs. the long game
You may have many reasons for wanting to convert your garage and they might not all be related to finances. For many people, an ADU is the most cost-effective way to keep a loved one close in a safe and protected environment where they can maintain some independence but still have help when needed.
If that’s your rationale for building an ADU, your short-term costs will be offset by long-term benefits to your family, and money may not play a role in your decision to build it. The increased quality of life for an aged parent or other relatives may be priceless for you.
If you’re looking at a garage conversion as a way to make money, however, you may find that it’s possible to recoup much of the cost of an ADU in rental income — though it may take a while to break even. If you’re willing to add your own labor to the work of the professionals you hire for the job, you could save significant money in the process, allowing you to earn an ROI in less time. But be mindful of your local regulations, as an increasing number of municipalities do not allow or place restrictions on ADU rentals.
Before you start building, however, no matter what your purpose, it will pay off in the end if you sit down with the facts and figures to determine how much your own conversion project may cost. This may require gathering estimates from contractors, calling your local zoning board, and thinking carefully about what you have the skills to do yourself — and what is better left to the pros.
If you’ve been thinking of converting your garage to an ADU, you’ve chosen a good time. ADUs are becoming more popular, and municipalities are becoming more and more likely to develop building codes that favor the construction of these handy little structures. So perhaps it’s time to sit down with a spreadsheet and your cell phone, make some calls, and start on your journey toward developing and building a useful accessory dwelling unit in your garage.