No one would deny the appeal of passive income, especially in an unpredictable economy! While the precise definition of passive income can differ from person to person, it’s easy to see why accruing capital by renting out part of your property is a smart move, even if it requires some careful oversight.

When the housing market is challenging, we often see people get creative making the most out of their properties. One innovative solution is skyrocketing in popularity: the Accessory-Dwelling Unit, or ADU. In the last 10 years, the number of ADU permits issued in California has increased by almost 100 fold!1 The ADU marketplace is full of innovative designs by leaders in architecture and sustainable buildings. Choosing an ADU, and having great resources throughout your build has never been easier. 

Because an ADU offers self sustaining, full accommodations, it can be the perfect site for hosting a short-term rental. Across the country, and across the world, millions of people are benefitting from the financial boost of managing a rental right on their very own property. 

However, just as interest in ADUs has changed greatly in the past decade, so too have laws and protocols regulating short-term rentals. These regulations can differ from state to state, county to county, and even between municipalities. While building an ADU on your property can benefit you and your family in myriad ways, if you are interested in it’s potential as a short-term rental, the first thing to do is check your local legislation. 

While this information can often be found online by searching your city name and building laws, you can also go to your town’s city hall or mayor’s office, or department of housing, with your questions. If there is a HOA, or Homeowner’s Association where you live, make sure to also check that your plan is in compliance with neighborhood standards. 

When you are ready to build your ADU, take advantage of the boom in beautiful, environmentally aware designs in today’s marketplace! A good builder will be able to advise the best way to site the building on your property.  Keep privacy in mind when situating your ADU. This will create a sense of ease for both you and your tenant. Being intentional about the facings of large windows, and employing  your landscaping to create a sense of privacy, will add ease and definition to your living spaces. 

Many homeowners find it beneficial to offer their renters a separate entrance, either by driveway, or footpath, that directs traffic around the main house, so everyone can be comfortable with sharing a property while feeling at home, even if only for a few days.