Families in the United States are experiencing a housing market squeeze caused by historically low inventory and high prices. Many families are navigating this changing market by considering multi family living situations that might not have been on the radar just a few years ago. Whether it is family members moving in to provide financial relief and support, or families creating rental income by adding or renovating spaces to host separate families, the trend of multi-family living is gaining ground in the mainstream consciousness like never before. Before you jump in and convert that garage to an in-law suite there is much to consider.

An important first step is to consider whether you are creating an accessory dwelling unit or a two-family property. In most municipalities an accessory dwelling unit is permitted for the purpose of providing housing for an additional family member. In some municipalities, renting this space in any way would be prohibited, while other areas have more lax regulations. It's important to thoroughly research your area's regulations before moving forward with construction plans to avoid any expensive surprises. Often your local planning and zoning office can provide specific guidance in this area. An accessory dwelling unit is more likely to have the following attributes according to a McKissock’s 2022 article:

• The unit was an attic, basement, or garage conversion for the purpose of providing additional living space to a family member

• The detached unit is built to characteristically mimic the primary structure’s architectural style and design

• The detached unit is subordinate in size to the primary dwelling

• The accessory unit does not have its own separate utilities

• Zoning requires the primary structure to be occupied by the property owner as a permanent and principal residence

• The main dwelling and additional unit(s) are mostly conforming to the neighborhood as a single-family with ADU

• The predominate use for similarly configured properties in the market area is single-family with ADU

Alternately a two-family property is often created for the purpose of providing additional income to the primary resident. There can be very specific regulations regarding two-family properties and whether they are permitted at all, whether short term rentals are allowed, how many occupants are permitted and how the utilities for the property must be planned and monitored. According the same 2022 article a property is likely to be considered a two-family property if:

• The unit has its own separate mailing address

• The unit has its own separate utilities and meter

• The unit has more than two bedrooms

• The attached or interior additional dwelling unit has its own private entrance and has no access to the primary dwelling’s living areas

• A two-family dwelling is legal under the current zoning

• Zoning allows the unit to be rented

• The additional dwelling unit is currently and legally used as a rental unit

• The property generates additional revenues or income from its occupants in addition to unit rental income, such as additional rent for parking, car storage, or coin laundry

• The property has been marketed in the past as a two-family

• The main dwelling and additional unit(s) are mostly conforming to the neighborhood as a two-family

• The predominant use for similarly configured properties in the market area is two-family

It is correct to assume that adding additional living space to your property will certainly raise the value of the property no matter what type of additional dwelling is created. However, the creation of a two-family property where it is legally permitted has much greater potential to both add value to the property and create revenue for the primary property residents.