Things to Know About Buying A Farmington Hills MI Home With Guest Unit
For many homebuyers, a separate guest house or attached in-law suite is the ultimate home purchase wish-list item. There are so many advantages to owning a guest unit. Some homeowners may use it to host relatives for long-term visits throughout the year. It’s much more convenient to have separate accommodations for guests, allowing both you and them plenty of privacy and space. While others might use the unit to house elderly parents, as transitional space for older children, as a studio, home office, or gym, or as a source of passive income by renting it out.
As the demand for multigenerational housing steadily increases, so has the interest in guest houses and in-law suites. It is estimated that 64 million Americans currently live in multigenerational households. Mostly associated with the millennial generation, more young adults are staying home and living with their parents for longer to give them the time to earn money and gain financial independence before they strike out on their own.
Guest homes are ideal in this situation giving both parents and the young adult plenty of privacy and personal space. An in-law unit can also be the perfect accommodations for elderly parents, providing a convenient and comfortable setting that allows for independence and privacy, and with added affordability compared to separate households. Considering the average cost of assisted living can cost as much as $4,000 per month, it’s easy to see how this option can be a win-win situation for everyone in the long run.
A guest unit can also be a great source of passive income through renting, whether for long-term renters or for short-term vacation rentals like Airbnb or VRBO. If you decide to take the renting route, you will need to check with your local city for any requirements regarding permits or zoning laws that may prohibit you from renting the space. In particular, vacation rentals using Airbnb have specific rules and zoning laws you must follow.
Also keep in mind that with a vacation rental, you must pay to furnish and stock the unit, manage bookings and payments, hire a cleaning crew, keep up with landscaping and repairs, and find new ways to attract happy renters. Is your home is in a popular area? Will you even have renters that will want to stay there? Also, be sure to factor in vacancy when considering costs. How many renters will you need to be consistently renting the unit to make a profit, let alone break-even?
In order to make the home attractive to renters and prospective home buyers when it comes time to sell, the suite should have the ability to be closed and locked to the rest of the home for privacy and should truly function as an independent space with kitchen and bathroom facilities. Easy accessibility to the separate unit, as well as handicapped accessibility, improves the function of the independent living space and increases the value.
Will a guest house be included in the overall square footage?
An additional structure that is not connected to the main house in any way will not be included in the overall square footage. An example of this is a guest house that is in the backyard and has its own entrance. These structures are considered Added Detached. This is because the livable square footage of a detached guest house isn’t included in the price per square foot calculations. Garages, pool houses, guest houses, or any rooms that require you to leave the finished area of the main house to gain access are not counted.
If the additional structure is attached to any part of the main house, it can be included in the square footage. This applies even if the structure has its own entrance. For example, a guesthouse or in-law unit that can only be accessed from its own door but shares a wall with the kitchen in the house.
Will a guest house or in-law suite increase your home’s value?
At some point, you may want to sell your home and in-law unit – perhaps you move for a job or want to downsize when you retire. Whatever the reason, you’ll want your home to have gone up in value so you can walk away with more cash in your pocket. Homes with separate guest houses or attached in-law suites are growing in popularity. More and more families are choosing to live in multi-generational homes either to care for their aging parents or because of financial reasons.
However, while homes with guest units are increasing in demand, there is no hard figure on how much value they will add to your home because every real estate market is different. Buyers are looking for different features at different times, though an extra suite is likely to stand out for many reasons. If you want to calculate the value of your in-law unit, determine what it’s really worth including the value it will add to your own lives if you’re not planning on selling your home anytime soon.
If you use it to save money on in-home caregiving or retirement homes, what would you have spent on these things if you didn’t have the suite? If you plan on making money through short-term rentals, what will that income amount to? Also, think about what it would cost to add an in-law suite in the future. These things can all mean extra value to the right buyer. In-law suites and guest homes are highly sought-after elements, and when it comes time to sell, anything to make your property more desirable can tip the scales in your favor.
Buying a Farmington Hills home with a guest unit is a big financial decision that can quickly get overwhelming when you maneuver through the extra paperwork and city requirements. An experienced, Farmington Hills MI real estate agent can help you navigate the local market, city laws, and find an affordable property with an in-law unit that fits your budget so you have cash left over to cover any extra guest home expenses and upkeep costs.
Partner with top-rated Farmington Hills MI REALTOR® – Tom Gilliam
With a passion for real estate, Tom Gilliam has been serving Farmington Hills and the surrounding Oakland County MI area for nearly two decades. Tom is known for his friendly demeanor, dedication, and professionalism. He will be able to quickly ascertain your needs and goals and create a plan of action based on your specific criteria. Tom’s clients appreciate his honesty and transparency and feel it helps them as they make important real estate decisions. He understands how important good communication skills are to every transaction and is available for his clients whenever they have questions or concerns – promptly returning all phone calls, texts, and emails.
Having someone like Tom to advise and guide you means there is one less thing you need to worry about. He will protect your interests, advocate for you, negotiate on your behalf, and go the distance to ensure the best results possible. If you are interested in buying or selling Farmington Hills real estate or homes in the surrounding area, please give Tom Gilliam a call at (248) 790-5594 or you can reach him by email.
Tom Gilliam, REALTOR®
29630 Orchard Lake Rd.
Farmington Hills 48334