Learn more about elder cottage housing at the PNA home show.

Stop by the microhouse booth at the Phinney Neighborhood Association Home Design and Remodel Fair on Sunday January 30th to learn more about backyard cottages and the opportunities they provide for seniors.

http://www.phinneycenter.org/events/homefair.shtml

aging in place - elder cottage housing

What is a backyard cottage?

Backyard cottages are detached accessory dwelling units, a separate dwelling on the same lot as a primary residence in a residential zone. They are also called granny flats and laneway homes or ECHO housing. Unlike many types of ECHO housing they are permanent structures built to the same standards as new construction. Increasing numbers of municipalities are allowing backyard cottages. Backyard cottages are popular with municipalities because they provide affordable housing options and help them to meet growth management goals. They are popular with residents because they provide housing options that allow people to live where they work and play.  Backyard cottages are regulated by zoning codes that limit their size, height, and location.  In most cases the owner of the property must live in either the main house or the backyard cottage.

What backyard cottages are used for?

Aging in place

Aging in place is a catch phrase for seniors maintaining independence by living at home as long as possible, a goal most of us share. Unfortunately, many factors may conspire against this dream. Typical houses and living environments often don’t often favor seniors. In many instances our homes are not accessible for those with mobility impairments and may be located away from family and services.

Backyard cottages are a great option for many seniors. On one hand, families may be able to build a backyard cottage on their lot enabling all the benefits of multi-generational living. However, unlike moving into a room in the main house, seniors and their parents are able to maintain their independence. Because new cottages can incorporate universal design standards that facilitate mobility they may be cheaper than remodeling an older house to say add a downstairs bath, or a residential lift. There are many other considerations like efficient environmental controls, easy to use hardware and appliances that will enable a senior to live and function comfortably in their home. A senior may also build a cottage on their own lot to house a caregiver or a family member.

Beyond the immeasurable benefits of having family close by, there may be real financial incentives as well. In home assistance is much less expensive than assisted living or a nursing home care which runs in the range of $3,000 to $5,000 per month*. The cost of a cottage financed through an equity line of credit is in the range of $1,000 per month and increases the value property.

 *Genworth Financial 2008 Cost of Care Survey

Home office/guest cottage

Even those who embrace the downsizing ethos often need extra space.  Because backyard cottages are new construction they cost less to build and are less disruptive than many additions.  Backyard cottages can be an affordable alternative to leasing office space especially when factoring in the cost and time involved in commuting to and from work.

Investing where you live

Backyard cottages have distinct advantages over most investment properties. Because they share a lot with a primary residence the land they occupy is essentially free to the owner. And their construction may often be financed with an inexpensive equity line of credit.  As a result, rental cottages in good markets can reasonably be expected to generate a net rate of return more than double most rental properties.  

elder cottages housing a long term investment

Elder cottage housing can be used for many things in addition to housing an aging family member, it may be part of a long term investment strategy generating rental income.  Where backyard cottages are allowed by local zoning laws they have distinct advantages over most investment properties. Their construction may often be financed with an inexpensive equity line of credit and they don’t have land costs. As a result, rental cottages can reasonably be expected to generate a net rate of return more than double most rental properties.  


A hypothetical $300,000, 2 bedroom, 1 bath, house may rent for around $1,500/Month with tenants paying utilities. Factoring in taxes, vacancy and credit loss, but for the sake of simplicity ignoring depreciation and maintenance,  we have a annual net income of approximately 5% of purchase price.  A hypothetical 2 bedroom, 1 bath, backyard cottage would have comparable rental income but the cost of the cottage would be in the range of $100,000 - $125,000, yielding a return on investment greater than 10%.  


While construction costs are fairly consistent across a region rental rates vary greatly by neighborhood. For this reason backyard cottages in good neighborhoods can generate higher rates of return. A quick check on craigslist can help to get a handle on rental rates in your neighborhood. Microhouse can help put together a proposal regarding your project construction costs. We work with a tested team of engineers, surveyors, and contractors that can insure a smooth design and construction process.  We can also recommend lenders to aid in financing your project. 


Microhouse 
206.632.7115