An investment’s return can offer multiple advantages, including inflation protection, portfolio diversification, increased cash flow, tax benefits, and property efficiency. To see a profit, you can complete a remodeling project on your property, such as a Newport Beach kitchen remodel or the addition of an accessory dwelling unit (ADU). Aside from the benefits of other home features, doing so can generate an investment return on an ADU.
Potential Investment Return
The average return on investment for an accessory dwelling unit within California will vary. However, the averages for Newport Beach and neighboring locations are around five to ten percent and sometimes higher. Remember, this will vary significantly based on local market conditions, financing, costs associated with construction, the type of ADU you’re building, and other contributing factors.
Many residents see their traditional property value increase between 20 and 30 percent. However, an ADU can expand it even more. Sometimes, the unit can add from $200,000 to $450,000 or more of a return on investment. It depends on the property itself, the location, the current economy, and the sizing.
Best Layout to Consider
The design of an accessory dwelling unit can greatly impact its profitability. Building a unit to meet relevant codes is essential to attract financial institutions and potential buyers or renters.
Open layouts are considered the most likely to obtain a high return on investment because of the flexible space. This design enables the installation of a living room, sleeping area, or dining room. Maximizing usage, attracting natural light, and using cost-effective designs will all contribute to a higher return on investment.
Working with a reputable full home remodeling contractor can help with legal zoning, overall maintenance, permitting processes, and property management, which are all essential when choosing layouts.
Attached and Detached Units
Both attached and detached options are excellent investments in the San Diego and Newport Beach residential markets, with garage conversion and attached accessory dwelling units typically yielding the highest return on investment—up to fifteen percent. A detached unit can average up to ten percent of a return on investment, an internal ADU around thirteen percent, and a JADU potentially twelve percent.
Regardless, you want to avoid permit delays, cost overruns, construction mishaps, and appraisal challenges that could set back the project and lead to future issues that decrease the return on investment.
Get Assistance
When going over accessory dwelling unit designs and top upgraded features that can boost the property’s value, it’s best to work with a full home remodeling contractor. These professionals understand what conversions to make along with entrances and separate features to incorporate. Doing so can increase the home’s value, especially in high-demand housing markets like Newport Beach and San Diego.
The increased property value is also because an ADU detached unit can be rented out to others, becoming an investment property. You could utilize the space for working, enhancing the property’s appeal, and boosting your income.
Ready to boost your property’s value and enjoy the benefits of an ADU? Forever Builders specializes in designing and constructing high-quality accessory dwelling units tailored to your needs. From Newport Beach kitchen additions to ADU construction and full home remodels, we’re the pros to call for all your remodeling needs. Contact us today to schedule a consultation and take the first step toward maximizing your investment with an ADU in Newport Beach.