Accessory Dwelling Units (ADUs) offer numerous benefits for property owners. One of the most significant advantages is the potential for income generation. The additional rental income from an ADU can significantly offset the costs of owning a home, helping to cover mortgage payments, property taxes, and maintenance expenses. Beyond financial benefits, renting out your ADU on platforms like VRBO can be an enjoyable experience, allowing you to meet travelers from all over the world while providing a comfortable place for your sister, when she visits. Additionally, many property owners have found success in renting furnished ADUs to traveling professionals, such as visiting nurses. This niche market often provides a sporadic but healthy, income stream. The combination of financial, social, and practical benefits makes owning an ADU a highly appealing option for many homeowners. That being said, this blog is all about the key to successfully renting your ADU to a long-term tenant. These are the folks who will stick around for 6 months at a time.
13 Keys to Success
- Separate Exterior Spaces: Install fences or creative landscape/hardscape features to clearly indicate who has access to which areas. This separation helps maintain privacy for both the main house and the ADU. It should be visually clear during the prospective tenant’s first visit what space they will have access to.
- Utility Management: Clearly separate utilities or include them in the rent. The first choice is to ensure the ADU has its own electricity, gas, and water meters. Avoid charging flat fees for utilities, as they can lead to disputes and potential legal issues. Wrongful utility charges can be a costly mistake. Check out this article from Oregon Cub on tenant rights for utility billing.
- Internet Access: Work with your internet provider to ensure the ADU is internet-ready. Sharing service might seem like a good idea, but everyone uses their service differently. Sharing a router can lead to inconveniences, such as needing the neighbor to reset it when you are binge-watching a show at 2 AM.
- Electrical Independence: Give the ADU its own electrical panel to avoid conflicts over power usage and maintenance. Your tenant should have access to flip a breaker without bothering anyone in the main house.
- Mail and Deliveries: Provide the ADU with its own mailbox and ensure USPS is informed. Also, give the ADU a distinct address and clarify to delivery drivers where to drop packages.
- Tenant Space and Privacy: Lay out the rules upfront and then allow your tenants to live independently. Learn from each tenant experience and adjust rules as needed for future leases. Give tenants their space. It’s common for tenants to move on from their cozy ADU because the curtains in the main house move every time their dog goes out to use the bathroom or a friend comes over.
- Parking Arrangements: Clarify and document parking arrangements from the start. Driveway, private alleyway, and garage parking spaces should be clearly assigned to either the main house or the ADU.
- Natural Light: Don’t skimp on windows, especially in basement apartments. Many of our basement apartments sit vacant during the spring and summer months because you can’t help but notice how much darker it is in the subterranean units. It’s common sense to most, but natural light makes small spaces feel larger and more inviting.
- Entrance Appeal: Invest in a well-landscaped pathway to the ADU entrance. Ensure ample lighting is along the path for character and safety. Replace the tired old basement door with something stylish that feels like you’re entering a home, not a dungeon. A little extra care here can make a significant difference in attracting tenants and keeping them around.
- Garbage Management: Keep garbage bins separate and make it both tenants’ responsibility to get their bins to the curb. This helps avoid disputes and ensures cleanliness.
- Fix Squeaky Floors: Sound travels easily in old homes. Tighten floor joists and address squeaky floors to reduce noise in basement apartments, enhancing tenant comfort.
- Invest In the Outdoors: Give your ADU tenant access to a small yard or patio. Many tenants come from apartments, and the idea of even a small patch of grass can feel like a huge upgrade.
- Don’t Skimp on the Appliances: Mini appliances can work well for short-term tenants, but full-sized appliances and an in-unit washer and dryer are sure to meet your long-term tenants’ needs.
By following these tips, you can create a pleasant living experience for your tenants while maximizing the benefits of your ADU.
Are you ready to hire a property manager to support your rental portfolio? Let the Living Room team help! Call Jennifer O’Brien to request a rental assessment and learn more about Living Room’s residential property management services. Jennifer can be reached at (503) 501-0874
