Benefits of Building an ADU in Boise, Idaho

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If you live in the Boise area, you may have noticed ADUs popping up in the news more often lately. Recently, ADUs have gained recognition as a potential option to alleviate the affordable housing shortage that the entire Treasure Valley area is experiencing.

In the past several years Boise, along with several other municipalities in Idaho, have updated their requirements for building ADUs in an effort to make the option more appealing for area homeowners. In response, there has been a recent increase in the number of ADU permits submitted in Boise

At the state level, new legislation was introduced earlier this year, which would prevent HOAs and local governments from banning the construction of ADUs in Idaho. The idea of the legislation is to make it easier for residents in the state to build an ADU on their property with any local bans removed.

From a city planning & affordability perspective, the majority consensus is that ADUs create more affordable housing options while taking advantage of existing neighborhood structures and amenities. But what are the benefits of building an ADU in Boise for a resident and property owner? Is it something you should consider on your property? Let’s take a closer look at the benefits of building an ADU in Boise.

Before we jump into all the benefits, let’s be clear about what an ADU actually is.

What Is an ADU?

An ADU in real estate stands for accessory dwelling unit. It’s a separate structure on a residential property that already contains a primary dwelling unit, typically a single family residence. An ADU is sometimes referred to as a mother in law suite or guest house and it is essentially a separate structure that has everything required for someone to live independently of the primary residence. This would include a kitchen and a full bathroom. Additionally, an ADU is usually a smaller structure than the primary residence on the property. 

Another important distinction between an ADU and a smaller single family residence is that an ADU is not a separate property. It is a part of the property and as such is bought and sold along with the primary dwelling on the property. An ADU can’t be sold separately, which maintains the single family character of neighborhoods in which they are built. 

In Boise, property owners who build an ADU must live on the property either in the primary residence or in the ADU. This makes building an ADU in Boise attractive for residents who live on their property but removes the option for any investment properties that are not owner-occupied.

Types of ADUs

There are several types of ADUs, which can either be connected to the primary dwelling unit on the property or be completely separate construction. Most often an ADU also has a separate entrance from the primary residence and is its own private space.

An example of an ADU that is connected to the main property is an apartment built over a garage, or an existing attic space of the primary residence which has been converted. A separate ADU could be a detached garage conversion or a completely separate structure built on the property.

Types of ADUs - City of Boise
Image Source: City of Boise

Benefits of Building An ADU in Boise

Beyond the positive impacts related to the availability and affordability of housing in the area, building an ADU in Boise has many benefits for property owners.

Increase Property Value

The first and most often considered benefit of building an ADU in Boise, or in any location, is the benefit to property value.

With additional livable space and all of the other potential benefits that come with an ADU on your property, an ADU increases property value. As an example, according to a 2012 study in the Appraisal Journal, of the value of homes with ADUs in Portland, Oregon, an ADU, on average, contributed 25% to 34% of a property’s appraised value.

Just how much the value of your property increases is going to be highly dependent on your specific property and the area real estate market, so talking with a financial advisor or Boise area real estate expert is going to help you determine the specifics for your property.

Generate Income

Another huge benefit of building an ADU in Boise is the ability to generate income from this additional living space. An ADU can be a great way to generate additional income if it is used as a rental, either short term or long term.

An ADU As A Long Term Rental

According to RentCafe, the average monthly rental rate for an apartment in Boise in July 2023 was $1,642. With the average apartment size being 872 square feet. Applying this average to an ADU that is 700 square feet (the maximum size allowed in Boise), if you use your ADU as a long term rental unit, you could expect a monthly rental rate around $1,313.

Using current average mortgage rates of 7.74% and a loan amount of $150,000 for your ADU your monthly payment would be $1,074. Using these numbers your monthly rental income would more than cover the monthly payment required to invest in building an ADU in Boise, allowing you to generate income from your ADU. 

An ADU As A Short Term Rental

As a short term rental there is potential to generate even more income from an ADU; however, this is also highly dependent on your occupancy rates along with many other factors. According to Airbtics, average annual revenue for a one bedroom short term rental in Boise is $30,329.

Using this average puts the monthly rental income at about $2,527, also well above the amount required to invest in building a $150,000 ADU on your property (based on the same loan considerations we included above).

Keep in mind that there may be more costs associated with a short term rental property, which should be factored in to fully understand the income generation potential of building an ADU to use as a short term rental.

These numbers are averages based on information from the sources indicated, but they are useful in thinking about the potential to generate income from an ADU.

It’s always best to talk with a professional, such as a Boise property manager or real estate agent, about the income-generating potential for an ADU built on your land in the Boise area when making your decision to build an ADU. You may also want to talk with your financial advisor to better understand the potential based on your individual circumstances.

Additional Space

Another major benefit of building an ADU is the additional space it provides. Whether you moved to Boise from out of state and plan to use your ADU as a private space for any out of town guests you have visiting, or you’re working from home and plan to use your ADU as an office space. Not only do you gain this additional living space, but you do so without having to move your primary residence.

The other benefit is the flexibility this additional space in an ADU affords. You may plan to use your ADU as an office space now, but as a rental property in the future. This is a benefit over having additional space within your primary residence because additional space within your residence doesn’t have this same flexibility for potential use. 

If you are using the additional space as an office, there are several benefits to building an ADU specific to this purpose. You can benefit from the increased productivity that comes with having a separate workspace outside of your primary residence. You also eliminate the need to commute to an office saving you time and money that would otherwise be spent on commuting.

In addition, if you are a business owner using your ADU as an office, you can most likely deduct your home office expenses and you’ll avoid having to pay for a separate office space. For any in-person visits, using your ADU as your office space allows you to have a more professional setting versus hosting someone in your home or meeting at a local venue where there may be other distractions.

Private Housing for Family 

Providing housing for family members such as aging parents or adult children who are in transition and looking for affordable housing options is another great benefit of an ADU. Instead of having everyone under one roof, the separate living space that building an ADU provides, allows everyone to live nearby while maintaining privacy when needed.

This is invaluable and can be a particularly beneficial use of an ADU given the increased cost of housing in Boise which would otherwise make it difficult to find a suitable living arrangement for aging parents on a fixed income or adult children who may have limited income during a transition period such as recent college graduates entering the workforce.

Charitable Purposes

Another benefit of building an ADU is being able to help a friend or neighbor in need. Using your ADU to support charitable purposes, such as renting to a nonprofit or supporting a family member through a difficult period, can be a beneficial situation for everyone involved. Building an ADU, whether or not this is your primary reason, gives you the opportunity to be able to use your ADU when someone is in need.

Considerations When Building An ADU in Boise, Idaho

As an example, in Boise, city regulations for ADUs require that the ADU is a maximum of 700 square feet or no more than 10% of the lot size, whichever is smaller. If your property is in Garden City, Idaho, you’ll have the option to build an 800 square foot ADU or up to 50% of the principal dwelling unit up to 1,200 square feet, whichever is greater according to new ADU regulation introduced earlier this year.

There are a few items to consider beyond these benefits before you determine if building an ADU in Boise is right for you.

Depending on where your home is located, within the Boise city limits or elsewhere, you may have restrictions on the type of accessory dwelling unit you can build, where it can be located, and how it can be used. These restrictions can come from city regulations, homeowner’s associations, or even county and state regulations.

It’s important to understand the rules and regulations within both your city and state as well as potential requirements from your local HOA before you decide to build an ADU. You can contact your HOA for any neighborhood-related rules and check in with your city’s zoning department for any city-level regulations.

FAQs About Building An ADU in Idaho

Can I build an ADU in Idaho?

Yes, you can build an ADU on your land in Idaho; however, while most areas in the state allow property owners to build an ADU on their land, there are some areas where building an ADU is restricted. The first step in determining whether to build an ADU on your property is to determine if it is allowed in your specific area. You’ll want to check county and city zoning laws as well as any HOA restrictions or requirements that may apply to building an ADU on your property. 

It can also be helpful to talk with someone that has experience building ADUs and understands your local zoning and permitting requirements such as a local ADU contractor or builder. To talk about building an ADU in Boise, Eagle, Nampa or other locations in Treasure Valley, you can contact the Pathway Builders team.

Is building an ADU a good investment in the Boise area?

Building an ADU can be a good investment, particularly in areas with high demand for housing like the Boise area. In most cases building an ADU is going to increase the value of your property and provide the potential for additional rental income.

As with any potential investment you’ll want to consider the cost of the investment in comparison with the potential returns. Costs to build an ADU can vary and rental rates & property values are also highly variable based on location, so to get a better sense of the potential in your location, you can compare like properties and rentals in your area. You can also talk with a financial advisor about the potential to invest in an ADU on your property as it relates to your specific circumstances.

Do I need a permit to build an ADU?

Yes, in most cases you will need a permit to build an ADU on your land. If you are in Boise you can submit your ADU application online and view the requirements on the city of Boise website. If you are working with an ADU contractor, they may take care of the ADU permitting process for you or help you to go through the process step by step like we do with our clients at Pathway Builders.

How much does it cost to build an ADU?

The cost of an ADU is variable based on the size of the ADU, the design, style, and build materials as well as the location and any permit or impact fees required to build. You’ll also want to consider the cost of any financing required to build an ADU.

At Pathway Builders, our most affordable ADU floor plan starts at $139,000 for most locations in Southwest Idaho where we build. As a custom home builder in Boise, we can customize any ADU plan to fit your property and style. As a reference, according to Angi.com, the average cost to build an ADU can range from $60,000 to $360,00 in the US.

Is an ADU a tiny home?

An ADU can be a tiny home, but not all tiny homes are ADUs. A mobile tiny home or tiny home on wheels is not considered an ADU. This distinction is important especially if you are located in Boise, where mobile tiny homes are not permitted. Similarly, if a tiny home is the only dwelling unit on a property, it is not considered an ADU.

Wrap Up: The Benefits of Building An ADU in Boise

There are so many benefits to building an ADU in Boise and southwestern Idaho. Some of these benefits apply no matter where you live or are considering building an ADU on your property, but others are particularly beneficial in and around Boise given the current state of the housing market and recent influx of migrants to the area.

If you are considering building an ADU on your property, we’d love to help. You can contact us to set up a time to talk about your specific ADU project.