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Should You Convert Your Garage to an Accessory Dwelling Unit?

An accessory dwelling unit, or ADU, is a residence that may be attached to a house or in a separate structure located on the same property. An ADU must have its own entrance, kitchen and living area, and may tap into the main house’s utilities.

Renovating your garage into an accessory dwelling unit can give you additional living space or a new stream of income. Before you undertake such a project, consider the benefits and downsides, as well as local zoning rules.

Reasons to Convert Your Garage to an ADU
A garage can be turned into an apartment for an elderly parent, a place for a child to live when returning home from college during breaks, or a place for other relatives to stay when they come to visit. An apartment with a separate entrance can give family members privacy while allowing people to spend time together when they want.

You may be able to convert your garage into an apartment and rent it out to generate income. If you find a tenant to live there year-round, the monthly rent payments can offset some of your mortgage payments and give you more flexibility in your budget. 

Another option is to offer an accessory dwelling unit for short-term rentals. If you live in an area that’s popular with tourists, a garage that has been converted to an apartment may be more appealing to visitors than a hotel room.

An ADU can also provide additional space for people who are already living in your household. For example, you can use it as a workshop, art studio, home office or children’s playroom. 

Yet another option is to live in an ADU yourself and rent out the main house. That can give you financial freedom in retirement.

Though this additional living space may quickly increase your home’s value, remember that your property taxes may also go up.

Drawbacks to Consider
If you want to convert your garage, you will, of course, have to pay for renovations. The price tag will depend on the types of changes you want to make and costs for an architect, contractors, materials and permits. 

You may have to take out a loan or use a home equity line of credit to fund the project. If you rent out the unit, you may recoup the money, but there is no guarantee that you’ll get a renter right away or that the apartment will be rented out consistently. If you don’t have rental money coming in, you’ll still have to make payments toward a loan or HELOC.

If you decide to rent out this space, you will have to deal with maintenance, rent collection and other landlord-tenant issues. You’ll also have less privacy with a tenant nearby.

Converting your garage to an apartment means you won’t be able to use the space for storage. You’ll have to find somewhere else to store your vehicles, lawn care equipment and other items you currently keep in the garage.