What is an Accessory Dwelling Unit?
Charlotte Green: Hi, I’m Charlotte Green from the Cooperative Bank of Cape Cod. So, what is an Accessory Dwelling Unit or ADU? You might compare it to an apartment in your house, a lot of people convert spaces above garages or walk out basements into Accessory Dwelling Units. And then they rent them out and make a little extra money every month. They can also be freestanding or not attached to your house at all. There is so much flexibility.
What’s the buzz about ADUs?
Historically, permitting an Accessory Dwelling Unit has been time consuming and expensive. A lot of towns even had bylaws banning them. Due to the ongoing housing crisis here on The Cape, at this point the majority of towns have passed bylaws streamlining the application process for Accessory Dwelling Units.
There are grants available through the Housing Assistance Corporation, aka HAC, that help finance the renovations and additions necessary for an Accessory Dwelling Unit. Here at The Coop, we thought this was such an important piece of developing our community and maintaining sustainable housing that we went as far as developing a few new loan programs to help make financing an Accessory Dwelling Unit even easier.
Why would I want an ADU?
If having your home pay for itself isn’t enough of a motivator, having a renter in an Accessory Dwelling Unit means your part of solving the problem for affordable housing for our year round residents and work force. Those people are such a key part of what makes Cape Cod an amazing place to live, work, and play. If you’re a second homeowner, having an Accessory Dwelling Unit and a renter, means you have a second set of eyes on your property year round.
Are there any requirements for ADUs?
An ADU needs to be a completely separate living space for your renter. It needs to have its own bathroom, own kitchen, entrance, and living space. Some towns have square footage requirements and parking requirements so check on that before you start developing your project.
Are there restrictions on ADUs?
The intent of the town bylaws is to provide more affordable long term rentals for people here on The Cape. So there may be minimum residential lease requirements in place. Note I said residential, the ADUs should not be used for commercial space. Assuming you meet the town requirements, you can rent to whoever you like.
How do I find a tenant?
There are a number of local real estate agents who focus primarily in matching renters and landlords. The Housing Assistance Corporation also has some programs that really help thoroughly vet potential tenants to make sure you have a quality and reliable person moving into your Accessory Dwelling Unit. There are also a number of Facebook groups and online forums for people looking for rentals here on The Cape.
What should I do next?
So you’ve decided to get started. Such an exciting time. The first step is going to be exploring the parameters that your town has in place. Once you’ve done that, you’ll start looking at financing options. Some people choose to pay for the Accessory Dwelling Unit renovations out of pocket, but The Coop has developed a number of programs to help make it easy and affordable and leave you with some money in the bank. Once you know how you’ll be covering the costs, its time to start exploring the design and development of your ADU. If you’re going to be financing these renovations, it’s a good idea to have your plans in place and your builder selected prior to application. This will help you close more quickly. For those of you who are concerned, building out or renting an ADU in your home is not a violation of your primary residence mortgage terms.
If you want to do other updates or renovations around your house at the same time you’re putting on an ADU, or transforming a space, we have loans that fit that need.
How do I get started?
If you want to get the ball rolling today, or just have some questions you’d like answered, reach out to one of our talented Mortgage Loan Officers, they are here to help. The Housing Assistance Corporation also has a lot of great resources on their website.