The Financial Power of ADUs: How a Second Home Can Transform Your Property Value

What Are The Benefits Of Building An Accessory Dwelling Unit (ADU)?

Discover the game-changing potential of Accessory Dwelling Units (ADUs) in this eye-opening episode with licensed general contractor Alex Kosley. We dive deep into how these versatile structures—whether you call them mother-in-law suites, backyard cottages, or casitas—are revolutionizing property ownership in Colorado Springs.

The financial benefits alone are staggering. Colorado Springs homeowners are currently earning between $1,200 and $4,000 monthly from their ADUs, depending on their rental strategy. But that's just the beginning. Alex breaks down how a $200,000 ADU investment can generate approximately $100,000 in equity after 10 years and potentially $450,000 after 30 years, making it one of the smartest wealth-building strategies available to homeowners today.

Beyond the impressive numbers, we explore how ADUs solve real human problems. For families with aging parents, an ADU provides a compassionate alternative to expensive assisted living facilities while maintaining independence for everyone. "Close but separate" becomes the ideal arrangement that preserves relationships while acknowledging everyone's need for personal space.

Ready to unlock your property's hidden potential? Visit www.Yourstreamhome.com for a free consultation or call/text 719-644-6777 to start your ADU journey with Stream Home Construction.

To learn more about StreamHome Construction visit:
https://www.YourStreamHome.com
StreamHome Construction
719-644-6777

Episode Transcript

Speaker 1 (00:04):
Welcome to the Stream Home Construction Podcast,
where we take your project fromconception to completion.
Hosted by Licensed GeneralContractor Alex Kozley, we cover
everything from accessorydwelling units to commercial
construction in the greaterColorado Springs area.
Whether you're dreaming of anew ADU, planning an office
upgrade or tackling a majorrenovation project, we've got

(00:26):
the expertise to guide youthrough it.
Let's get building.

Speaker 2 (00:38):
Looking to add value, flexibility and income
potential to your property, anaccessory dwelling unit ADU
could be the smartest investmentyou make.
Welcome back everyone, tonyHill's co-host, slash producer,
back in the studio with licensedgeneral contractor Alex Cosley.
Alex, how's it going?

Speaker 3 (00:57):
Tony, I'm doing awesome today.
How's your day going so far?

Speaker 2 (01:01):
It's awesome.
It's awesome, and that's greatto hear that you're doing great
too.
Everyone wants to know, Alex,what are the benefits of
building an accessory dwellingunit ADU.

Speaker 3 (01:12):
Well, yeah, I love the question.
It's definitely one of ourfavorite questions.
Before I get into answeringthat too deep, first I do want
to pause and just clarifysomething for anyone new to the
term and who may be wonderingwhat is an ADU.
So ADU stands for AccessoryDwelling Unit, which basically
just means a second, smallerhome on the same lot as your
main home.
Some folks call it amother-in-law suite, a backyard

(01:33):
cottage or even a casita, amongmany other names.
And yes, the phrasemother-in-law suite might come
from the idea of housing yourin-laws, sometimes lovingly,
sometimes strategically.
You want them close by, butmaybe not too close.
We get it All joking aside.
Whether you're looking to addrental income, house a family
member or just boost yourproperty's long-term value, adus

(01:54):
are one of the smartest moves ahomeowner in Colorado Springs
can make right now.
So let's break this down.
The top three reasons why.
Number one rental incomepotential.
We're in a rental market wherepeople are earning anywhere from
$1,200 to over $4,000 per monthin rental from their ADU,
depending on whether it's along-term rental, mid-term
furnished unit or even ashort-term Airbnb style.
That income could cover yourmortgage or at least offset your

(02:18):
mortgage, substantiallyaccelerate your retirement plans
or fund other investments.
We've had clients tell us thisADU changed the game for our
family financially.
So another benefit when we'relooking at ADUs is really just
housing for family without theextra mortgage.
This one's personal.
For a lot of people, caring foraging parents or helping adult
children who need to come backhome is a big priority on many

(02:40):
people's radars these days and alot of families are facing
tough questions like should wespend $5,000 to $8,000 on
putting our parents in assistedliving?
Do we co-live and lose privacy?
But an ADU kind of gives youthe best of both worlds.
You get independence andproximity and the savings.
You're paying for an ADU whichis going to cost you a lot less

(03:03):
than an assisted living facility, and also not only that, you're
keeping for an ADU which isgoing to cost you a lot less
than an assisted living facility.
And also not only that, you'rekeeping your loved ones close by
makes them easier to care for,keeps them close.
But you can also still preserveyour space in Sandy because
they're close but separate, andfor a lot of families the
emotional value of having thefamily together is priceless.
But you also get some savingscompared to going into a typical

(03:24):
care unit.
Another top value from buildingan ADU is really just the
ability to build equity.
So, just like your home, youcan build an ADU with a mortgage
, a 5%, a 20% down payment, butyou get 100% of the equity
upside.
It's one of the most powerfulfinancial plays in real estate

(03:45):
and one of the reasons thatowning a home in general has
been one of the most criticalpathways to wealth in the United
States historically.
Using historical real estateappreciation figures, if you
build a 200,000 ADU in 10 yearsyou're likely going to have
about 100,000 in additionalequity built into that ADU over
that time.
Over 20 years you could seearound $240,000.
And in 30 years $450,000 inequity.

(04:06):
And that's just from holding itand it just going up in
accordance with historicalappreciation rates in the United
States.
So you can see big returns canjust pay for itself just sitting
there.
In some senses ADUs also theyincrease your property value
sometimes can help you sell aproperty faster if you do go to
sell, of course, for a higherprice with the ADU on it and do

(04:26):
open the door for some creativeloan structures that wouldn't be
available otherwise.
So kind of pro tip for therealtors out there.
You can most often useprojected rental income from an
ADU to help one of your buyersqualify for a bigger mortgage.
Or even if they're stuck andthey're kind of on the lower end
of the kind of entry level inthe market, an ADU can sometimes

(04:47):
be an option that will get themfrom not qualifying to be able
to buy anything to be able tobuy, you know, an entry level
home and get an ADU in there andat the same time they're also
going to have a lower mortgagepayment than if they just went
out and bought a house right offof the market that didn't have
an ADU.
So you know that can mean abetter house, can mean a better
location and more long-termwealth building potential as

(05:09):
well.
So ADUs, you know, aren't justa space solution, they're a
strategy.
In addition to the financial andfamilial value that can be
gained from an ADU, havingadditional space on your
property can provide otherbenefits and opportunities as
well.
We've seen homeowners use ADUsfor home offices, for teen
hangout spaces, for guest houses, creative or art studios, even

(05:31):
a quiet place to work from homewithout stepping over Legos.
It's not just a structure.
We want people to know theseare flexible, wealth-generating
tools and talking aboutaffordability from an owner's
perspective.
Housing affordability inColorado Springs is tight, but
for homeowners, as we'vediscussed some already, building
an ADU is one of the few movesyou can make right now that

(05:51):
gives you additional revenuestream, a long-term asset and a
way to support your familywithout draining your resources.
So final takeaway why build anADU?
It pays you every month orsaves you money if you're
housing family, compared toowning two houses or putting a
family member into a care unit.
Also grows your wealth throughappreciation.

(06:12):
Gives you flexibility andfreedom as well.
So whether you're paying to arental unit, a mother-in-law
suite or space for your collegegrad to live rent-free while
they launch their next chapter,the ADU investment has layers of
return.
So if you're here wondering,can I build an ADU in my
backyard in Colorado Springs,let's talk At Stream Home
Construction.
We'll help you evaluate yourlot, explore your options and

(06:34):
walk through the numbers so youcan make a decision with clarity
and confidence.
Visit us atwwwyourstreamhomecom and
schedule a free consultation.
We're here to help you buildsmarter.

Speaker 2 (06:47):
Alex, how long does it take to build a typically ADU
?

Speaker 3 (06:54):
Yeah, tony.
So typically ADU process forcustom design build projects
we're looking at about fourmonths of pre-construction time.
So that's to get through allthe planning and all the
permitting, get all theapprovals from the city and the
building department and thenonce we start construction which
is pretty much as soon as thebuilding plans are approved and
we can pull a permit we'retypically looking about four

(07:14):
months of construction on ouraverage ADU project.
Now, that being said, on ourmodel ADUs that we've talked
about some here, we're trying toreally tighten those timelines
down by creating a streamlinedprocess.
We don't have to go through allthe design work.
We already have approved masterplans with the building
department.
We're expecting to be able toget a contract signed and start

(07:34):
construction within one month,as opposed to four months on a
custom project and construction.
We will be able to get thatdown to around three months once
we've really optimized thoseprocesses.
So we're really excited aboutthat, to really get that
timeline almost cut in half fromabout eight months down to four
months when looking at a model.

Speaker 2 (07:55):
Okay, can you share a success story where an ADU
really made a difference for ahomeowner?

Speaker 3 (08:01):
Absolutely.
Yeah, I think one of myfavorite stories is a project we
did over on the west side ofColorado Springs.
It was a couple got married.
One of the spouses lived withher parents and her son and then
the couple got married and youknow they didn't want to kind of
everyone move into one houseand now the other spouse is
living with the one spouse'sparents and kid.

(08:23):
So what?
We built the ADU and then thecouple moved into the main house
and then the parents and thechild, her son, moved into the,
into the ADU, and they both haveseparate spaces in the ADU as
well.
So the son and his grandparentscan live, you know, relatively
independently there as well.
But they could have kept twohouses but that would have cost
them several thousand dollarsmore per month to do that.

(08:44):
Additionally, in this familythe parents are aging.
We were able to install anADA-compliant walkway ramp
between the main house and theADU, so when and if the parent
or parents are in a wheelchair,they'll easily be able to get
back and forth between the twoproperties.
We've really just created asolution for this family that is
going to save them a bunch ofmoney over time and keeps the

(09:07):
family close together, separateso that not everyone has to live
under the same roof, butthey're all on the same property
.
They're close by, but they caneasily go to their own property
and get some privacy.

Speaker 2 (09:25):
That's one of my favorite success stories of how
ADU really added value to one ofour clients.
Well as always, alex, that'ssome informative and helpful
information you gave us today.
Thanks again, and we'll catchyou in the next episode.
Have a fantastic rest of yourday.

Speaker 3 (09:33):
You too.
Thanks again, Tony.
See you next time.

Speaker 1 (09:40):
That's a wrap for this episode of the Stream Home
Construction Podcast.
Ready to bring your vision tolife?
Snag a free on-siteconsultation by visiting our
website at wwwyourstreamhomecom,or call or text us at
719-644-6777.

(10:00):
Until next time, let's keepbuilding your residential and
commercial dream in the greaterColorado Springs area.