Buying a Home With a Rental Unit

By: Tina Parker

Buying a Home With a Rental Unit

Tags: HOMES IN HALIFAX, HOUSE SELLING, SELLING A HOUSE, REAL ESTATE IN HALIFAX, TINA P

Buying a home can be full of difficult decisions, and as housing prices climb, maybe even more difficult for financial planning. For people looking for a different way to help pay for their mortgage every month, choosing a home with an attached rental unit might just provide the monthly bump that makes that payment a little easier to accomplish.

What Is an Attached Rental Unit?

An attached rental unit formally called an Accessory Dwelling Unit (ADU), is typically a smaller living space adjacent to the main home. It might be a tiny house in the backyard or something more like self-contained mother-in-law quarters attached to the house. It can even be a small apartment over the garage. There aren’t a lot of rules about what an ADU has to be, except that it should be fully autonomous.

The reason for autonomy is that this is what it takes to really have solid rental income potential from a secondary dwelling on a regular lot. Imagine if you were renting an apartment somewhere, you’d certainly want to have your own kitchen and bathroom, wouldn’t you? It’s difficult to rent units without these features, so typically, they’re part of any successful ADU.

Benefits to Having an ADU

Having a rental can be a lot of work, but there are also a lot of benefits to having an ADU on your lot. Not only does the rent from an ADU help pay the mortgage every month, but it can also act as a flexible space for whatever life might throw at you down the way.

For example, when you first buy your home, maybe you really need help with the mortgage payment, so you use the ADU as a long-term rental unit with a tenant who has signed a year-long lease. This tenant not only pays the utilities for that unit but also helps out with the mortgage by paying rent. It’s a great situation while you’re trying to pay down your mortgage and ramp up your income.

As time goes by, you might get tired of dealing with a long-term tenant, but you can still use that unit for short-term tenancy if allowed by your neighborhood and city. Airbnb, for example, gives you the option to rent by the day or week, so you never have to stick with a tenant for too long. You can turn off being a landlord for a few weeks and go on vacation yourself without having to worry.

If Airbnb isn’t your thing, your ADU can still be used by your college-aged child or aging family member. Remember, these are essentially self-contained apartments, so they should provide a great deal of privacy and autonomy to anyone living inside. ADUs have long been favored by people with aging parents, hence the former popular nickname “mother-in-law quarters.”

Financing a Home With a Rental Unit

If you’re looking for a house with a rental unit, you may also wonder how you’re going to finance it. Do you need a special kind of loan or is this edging into the realm of commercial financing? Not at all. Most mortgages will allow you to purchase a property that has up to four units on it. That’s a lot to handle if you’ve never had a rental, but a single ADU is a pretty easy upkeep.

All you need to do is choose a property that you like and ensure that it will pass any requirements from your lender (your Realtor can help with this). Certain programs may have specific inspections, such as FHA, VA, or USDA, so you definitely want to let your lender know that you’re looking for a property with an ADU before you commit to your loan.

Ready to Finance Your Home and ADU?

Well, you’re going to need a good lender who isn’t shy about writing loans on properties that might be a little less than typical. Luckily, I can help you find the best lenders! So, never hesitate to ask for my help when you need any assistance. I’m always here, one call away. The best lenders in your area are already waiting, and before you know it, you’ll have a home of your own, and a small rental unit to help pay the extra bills.

Already have that ADU in play? Well, I can also help you maintain it. I can help you figure out exactly what kind of professional you’ll need to get the ball rolling. So, what are you waiting for? Call me now or shoot me a message! 

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