10 Things To Think About Before Building A Guest House

 Thinking of adding on or building a tiny guest house or an Accessory Dwelling Unit in your backyard? It’s not as easy as installing a treehouse. Read on for ten things you can't afford to contemplate before building a guest house....

Accessory dwelling units (ADUs), or guest houses, usually have separate kitchen and bathrooms from the main building on the property. With multi-generational living on the rise, the guest house/casita/granny flat/mother-in-law suite space is becoming increasingly popular.

 
A separate living quarter could accommodate family members, adult children or domestic help like on-site medical personnel. There is also the prospect of creating a revenue stream by renting out the space. These factors all sound delightful, but there are still things to consider before building a guest house.
 
Local Laws

Laws in Colorado are changing and recent legislative efforts have responded to the trend to build Accessory Dwelling Units. What can and can't be done today may change soon. It is therefore important to be aware of what other cities such as Seattle and Los Angeles are doing to help solve affordable housing by the way of building ADU's.

Here are two examples of red tape incurred by local laws regarding guest homes on your property. In Seattle, the property owner must live in either the main house or in the attached/ detached ADU. Also In Los Angeles, restrictions include:

• The guest house can’t be rented
• There must be an existing single-family home on the property
• It cannot exceed 30% of your current home’s floor area or be larger than 1200 square feet
• There must be a minimum of one additional parking space

Can you Convert an Existing Shed or Garage? 

Some cities allow this, but if you're living in a historic district, the rules might prohibit this type of alteration. But converting a portion of your existing house, or adding on are better alternatives.
 
HOA Restrictions on Guest Houses 

Will your neighbors object? Find out from the city if they will be holding a public hearing to determine whether or not the structure would somehow impede on your neighbors' rights. 
 
The Permit Process 

You have to submit plans, get permits and follow all construction regulations and design standards.
 
Safety Regulations 

Safety regulations insist that you incorporate standards addressing fire safety, water lines, sewer connections and distance from lot lines before you build.
 
Financing 

Sometimes it's hard to get a bank loan to finance the addition of a guest house.
 
Miscellaneous Problems 

Other problems could arise as a result of an ADU, including landlord-tenant disputes, parking issues and expenses such as hazard insurance premiums.
 
Long-Term and Short-Term Lease Laws

If you're planning on renting out your guest house via VRBO or Air BnB, read up on what taxes (if any) you have to charge your guests. For example, Parker Colorado has a 30 day minimum stay requirement.
 
Appraisal 

Appraisers are not able to use "detached" square footage in the same way they estimate your primary home's space, meaning that you might not recoup your investment.
 
Property Taxes 

Property taxes will most certainly increase. Speak to the assessor's office and even a good CPA to determine your new property value.

Modified by: Theresa Tscheschke Gunal ; Used courtesy of Jasser Ryan Go, Home Actions, LLC