For the house my fiancé and I purchased, we had a specific requirement when searching. That requirement was to have the ability to convert the garage into an Accessory Dwelling Unit (ADU). Starting last year, to combat affordable housing, the state of California allowed the conversion of garages (with separate utilities) and the ability to be rented out. This was important to us as we want to have the ability to rent out the ADU to help with our overall bills. We aren’t the first people to do this. Many of my first-time home buyers are getting roommates or renting out sections of their properties.
We are all doing this for a variety of reasons, but here are the commonalities:
- Things happen, and we want to be prepared. If someone in the household loses their job or has unexpected expenses, we want to make sure that at least part of our mortgage is covered. It’s a way to better protect ourselves for when life throws us a curveball.
- We are realistic in our lifestyle. We don’t plan on renting out rooms or garages forever. But we know that what we do today, will help us down the road. Renting out the ADU doesn’t really impact our lives, other than not having covered parking or storage that wouldn’t otherwise fit in a shed. But this “sacrifice” will help later when we are ready to have the nest to ourselves.
- We don’t want to extend ourselves if we don’t have to. Here in Los Angeles, we often see people overextending themselves financially by going out to eat and overenjoy the experiences the City provides. But this all comes at a cost. Just about all my clients who do rent out their space don’t have to, they are choosing to. We know the benefits of doing it and it is reflective in our bank accounts.
We’re proud to be landlords. It gives us not only the income, but the tax benefits and the experience of being an investor and entrepreneur. It gives us the financial freedom to do what we want, when we want.
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