CAN AN IN-LAW SUITE’S COST BE RECOVERED WHEN SELLING YOUR HOME?
Q: Dear David, I’m faced with a bit of a dilemma. My mother in law—now a widow—needs living assistance and can’t stay in her house alone anymore. We’d like to invite her to live with us, but she’s accustomed to having her own private space. Accommodating her would mean converting the lower level into an apartment with separate entrance. Adding a kitchen and laundry hookups, expanding the half-bath to a full, bumping-out a living area and other finishes were quoted at about 25% of what we paid for our home! I’m worried these improvements will NOT add 25% to our home value, and we’ll lose all that money if we ever sell the house. Is this the case? Please help!
– Mike R.
A: Dear Mike: This is an excellent question! In fact, I’m asked about in-law suites often these days. As we all know, the Boomer generation is enormous (and aging), and many families are trying to figure out how to create comfortable “multi-generational” homes.
In addition to the cost versus benefit of construction, the biggest concerns my clients have on this are about quality of life and familial diplomacy. The National Council on Aging’s 2015 survey found that 75% of older adults want to stay in their own present home for the rest of their lives. This shows that even when it becomes necessary to move, there may be a strong reluctance to do so. Old habits die hard! The diplomacy needed is to work out an arrangement that affords your loved one assurance that he or she will have plenty of independence but also the convenience of live-in chauffeurs, cooks, companions—whatever you work out to everyone’s satisfaction and true commitment. The overarching reason to have your mother-in-law down the hall is that someone who really cares is close at hand, especially if a medical emergency arises.
Regarding cost, as you’ve learned, the degree of assistance needed and the amount of privacy required will determine the price of investing in multi-generational improvements, and it can be formidable. But consider this: the national average cost for nursing home rooms is around $8,000 per month and growing, or $96,000 annually.
Now let’s address resale appeal. A recent Pew Research survey shows that 64 million Americans lived in multi-generational households. That’s 20% of the entire population, and that number should continue to rise for at least ten years. Moreover, the National Association of Realtors states that 20% of buyers would pay more for a home with an in-law suite. Depending on the specific improvements you make, your exact location, and the demographic trends in your area, it’s possible you will recover most—if not all—of these costs.
As you plan your project, be sure to make accessible and safe improvements. Future buyers will be looking for these features in an in-law suite. Include easy-entry bathtubs, grab bars in the tub and commode, wide doors for wheelchair access, navigable steps or staircases, slip-resistant flooring materials like vinyl planks and close-knit carpeting, and functioning smoke detectors.
One final thing to consider. Certain neighborhoods restrict in-law suites or have regulations that make them prohibitively expensive. An experienced Calabasas & Hidden Hills Real Estate Agent can tell you the ins and outs of the construction regulations in your community. Remember, Mike: every home, every neighborhood, and every project is unique. Whether or not your investment makes sense for your family and will pay off in the coming years depends on a number of factors. Give me a call, after a little research I’ll be able to give you the concrete answers you’re looking for.