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What’s the ROI on Building an ADU in the Columbia, SC Area?

Thinking about the return on investment (ROI) of any major residential construction project is important, whether you are looking for an immediate return by renting the property or a more long-term return when you sell it down the road.

The ROI on building a rentable accessory dwelling unit (ADU) is very strong in Columbia, as it’s a popular city where people are always looking for short-term rentals. The ROI of building an ADU solely for personal use is nothing to scoff at, either, and you can greatly increase your home’s value by building a home gym, office, or even a guest suite for friends and family.

Begin planning an ADU to add to your property in Columbia, South Carolina, by calling Phase One at 803-404-7168.

What is the ROI on Building an ADU?

The exact ROI on building an ADU varies, from location to location and project to project. You should expect a meaningful ROI, whether you build a detached or attached ADU.

There’s a wide range of ROIs for ADUs, and the return may be larger if you build and rent out a detached ADU some distance away from your main home rather than an attached ADU.

There isn’t a set ROI for building an ADU on different properties. Still, there is generally a positive return for homeowners, whether they rent out the ADU immediately or build it for personal use, as it adds value to the property when they sell it in the future.

What Are the Key Factors in the ROI on Building an ADU in Columbia, SC?

One of the main reasons homeowners build an accessory dwelling unit on their properties is to create a useful, often rentable space and an extra stream of income. Renting out a guest house or suite can help you achieve ROI on an ADU much sooner than you anticipated.

Rental Income

Expected rental income from the ADU is a key factor in determining the ROI on building an accessory dwelling unit on your property. If you want to build an ADU solely for personal use, such as a guest house for visiting family, rental income won’t be a factor you should consider when assessing ROI.

Property Value Increase

Adding accessory dwelling units to properties can significantly increase property value, often by 25-30% or more, depending on the ADU’s size, finishes, and building materials. ADUs substantially boost a home’s resale value, another perk of building one.

Construction Costs

How much you spend designing and building an ADU affects how soon you start to see a notable return on investment. Construction costs are largely based on the requirements of the build itself, which we can estimate when designing an ADU for your property in Columbia.

Though they are often relatively small, ADUs must have all the amenities of a house, including insulation, a kitchen, a bathroom, designated sleeping and living areas, and plumbing and electrical systems.

How to Calculate Your ROI on Building an ADU

To calculate the ROI on an ADU, subtract the total investment cost from the total return or final value to find the net profit, then divide by the original cost of the investment and multiply by 100 to get a percentage.

Estimate Build Cost

To estimate your ROI for building an ADU, you must estimate building costs. Part of working with Phase One is getting realistic feedback about your budget and how far it will go. We can tally building costs based on the complexity of the build, the materials used, and the finishes selected, so you can confidently estimate them.

Project Net Income

You can also project your net income from the ADU if you plan to rent it to visitors to the Columbia area. If you don’t plan to rent the ADU, estimating the total value added to your home helps, which largely depends on the quality of materials and finishes used.

FAQs About the ROI on Building an ADU in Columbia, SC

What’s the ROI on Building an ADU for Personal Use?

The ROI of building an ADU for personal use is lower than that of building one to rent. However, it can still significantly increase your home’s value in Columbia and benefit you in the long run.

Is the ROI on Building an ADU Worth It?

Building a rentable ADU is often worth it for homeowners in cities like Columbia, which are popular tourist destinations and have a constant need for short- and long-term stays.

How Long Does it Take to See the ROI on Building an ADU?

It takes less time to see the ROI on building an ADU if you rent out the space than if you build an ADU for personal use and then sell the property in the future. However, you will still likely see an ROI when you sell the home, as the property value will have increased because of the ADU.

How Does Zoning Affect the ROI on Building an ADU?

Zoning rules dictate whether or not you can build an ADU on your property, and if so, where you can place it and what construction rules you must comply with. Not getting zoning or permitting approval can lead to fines and construction delays, affecting the ROI on building an ADU.

How Can You Maximize the ROI on Building an ADU in Columbia?

Intentionally maximize the ROI when designing an ADU by choosing architectural styles, building materials, energy-efficient features, and luxury finishes that stand the test of time and enhance the value of your home and property as a whole.