Why Aren’t There More ADUs Already?
In researching this report, we interviewed homeowners, town officials and builders. We also surveyed property owners who participated or considered participating in our Rent 365 program which provided an incentive for second-homeowners to rent out their home year-round. That program succeeded in adding 25 year-round rentals across the Cape in 18 months.
However, many more property owners inquired about the Rent 365 program but opted not to participate. From those property owners and our other interviews, we learned that greater awareness about ADUs is needed, and that in order to consider becoming a landlord for the first time, participants would need a larger financial incentive to offset perceived risk, better financing options, and technical assistance and education.
ADUs Provide Flexible Home Use for Different Life Situations
First Home
Rent from ADU can make ownership affordable
Young Children at Home
An ADU can house a childcare provider
Empty Nest
Rent can support college or travel expense, tenant can keep watch on property
Aging Parents
Can move into the ADU, or it can house a care provider
Housing Assistance built out our My Home Plus One ADU program to address the five obstacles to creating ADUs identified by our research:
1) Awareness
Adding an ADU has not been allowed at all in many towns for many years, and many homeowners don’t know the bylaws have changed.
2) Technical Assistance
Homeowners don’t know how to determine what can be built or what steps they must follow to get approvals from the town, hire a contractor and get it done.
3) Financing
Many homeowners don’t understand their options in terms of using home equity to secure a loan and the benefits in terms of immediate cash flow and long-term return on investing in an ADU.
4) Landlord Support
For most owners, their home is their sanctuary. Considering renting out a portion of it to someone else is a big step. Homeowners want more clarity about rules and best practices for tenant selection and management; and they want incentives that reduce the upfront investment and financial risks of becoming a landlord.
5) Upfront Costs
Without a clear path forward, a homeowner won’t invest upfront funds for an architect or septic, yet no project can move forward without professional plans. Financial assistance not only incentivizes a homeowner to make the investment but also mitigates their financial risk.