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“An intergenerational movement is happening. Probably 70% of our ADU work is for families that are multigenerational. Often a young couple with young kids decides to move here and one or both sets of parents say ‘Let’s move to Portland!’ They build the ADU so they have a place to live. It’s discouraging that the balance in this equation – which has always been value based – is based on an economic turn. The values were always there. The intergenerational benefits were always there. They were just stymied by the reluctance of the financial industry to recognize them.” –Sam Hagerman
In Tips for Basement to ADU Conversions and Tips for Garage to ADU Conversions, you’ll see that there are often unforeseen expenses when building an ADU, especially if you’re converting an existing space. The hidden costs of building an ADU shouldn’t be underestimated.
However, neither should the hidden values. Just as there are often unforeseen expenses in an ADU project, there are also benefits to having an ADU that simply don’t show up in the initial calculations.
These hidden values are particularly evident in the conversations I’ve had with multigenerational families who use an ADU to create greater housing flexibility and security. There are so many tangible and intangible benefits of creating a multi-generational housing situation that I can’t possibly catalog them all here. But I’d like to give you a sense of how ADUs are working for multigenerational families.
Typically, a family owns the primary dwelling and creates an ADU to provide a nearby but autonomous dwelling space. Sometimes a family goes looking for a property with ADU potential as Lesa Dixon-Gray and Bonnie Dalton did. (If you’re looking for a property with ADU potential, be sure to check out How to Buy or Sell a Property with an ADU (or ADU Potential)). Other times they work with a home that has been in the family as Dennis & Stephanie Martin did.
An ADU might be used by a boomerang kid, a family member with special needs, or an aging parent. Rent may be exchanged or it may not be. In some cases, the older generation will sell another home to provide the funds to create the ADU, which enables them to live rent-free in perpetuity. Often tasks like babysitting are exchanged for other tasks such as grocery shopping. Typically, some meals are shared throughout the week, too.
It’s possible to assign a dollar value to the direct costs of creating an ADU: the structure, the systems, the finishes, the design, and the construction labor. It’s harder, but still possible to assign a value to the resulting space. (Check out A Practitioner’s Guide to Appraising ADUs.)
Then we get into a gray area where there are indirect costs that could potentially be calculated. For instance, you’d likely save some good money if your boomerang kid could stay in the ADU for a couple months after college while they get on their feet. And you’d certainly be saving money if mom is right next door so you don’t need to fly down to North Carolina to take care of her if she gets ill. There’s also the money you’d save on childcare if dad can take care of the kids for the two hours between school and you getting home from work. And, of course, you’d save a small fortune in long-term care costs if mom paid for the ADU with the sale of her former house so that she’d have a permanent residence near you (as Sharon Nielson did.) If part of her long term plan was to leave you the legacy of the ADU as possible future rental, you’d be even more fortunate.
As Paz of UDU Design, an ADU Design-Build company that specializes in accessory dwellings to meet the needs of multigenerational families points out:
“There are economic reasons to have your parents living with you. There are economic and psychological costs when people are in a home and benefits when people are living in community again.” – Paz
But what is the value of those familial connections?
For instance, let’s say you were trying to do a cost-benefit analysis to determine whether it “makes sense” to build an ADU. What value should you place on the following:
How do you assign a value to the things that are “priceless”?
Maybe you don’t.
Maybe you don’t need to.
Maybe you know that a mother-in-law unit would give you and your mother-in-law the sort of space you’d need to live together comfortably for a long time to come. (“Two Kitchens, Please!” says Bonnie Dalton’s mother-in-law!)
It’s not unusual in the small house movement for people to explain, as Dee Williams did during the keynote at the Build Small, Live Large Summit, that “it’s really not about the house.” It’s not about the structure itself and the return on investment. That’s part of it certainly. (And it’s great that there are Options for ADU Owners: Rent One, Both, or Neither.)
But it is also about the intangible experiences that money just can’t buy.
Over and over again in my conversations with over 80 ADU owners, designers, builders, and realtors, I learned that for many people it was worthwhile to build an ADU for a multigenerational family even if there didn’t appear to be a good return on investment in the short-term. Of course, this is not an endorsement to move forward without a good plan or to underestimate the costs. I just wanted to point out, as so many ADU owners with multigenerational families did, that the return on investment in an ADU can’t always be calculated.