Ever thought about having a long term tenant, space for family to stay, or even an Airbnb? An in-law or second unit might be just what you need to help bring in some additional income or add value to your property.
Picture this scenario: Let's say you buy a single family home for $1,000,000 with 20% down, which would mean your monthly payments (including property tax and insurance) would be roughly $4,789.
Now, let's say you buy a single family home with an in-law unit for $1,500,000 with 20% down, your monthly payments (also including property tax and insurance) would be roughly $7,185. Here's where you can sweeten the pot: if the 2nd unit rents for $2,000+, your monthly cost once rental income is applied, is actually pretty close to buying a $1M property without a 2nd unit.
Right now, in Redwood City Craigslist shows studio apartments can go anywhere from $1,150-$2,000+ and one bedroom apartments from $1,995-$3,000+. Who wouldn't want that kind of cash to help pay the mortgage or save for a family vacation?
Finances aside, here are a few reasons you might want to consider a second unit:
- It can add value to your property.
- You can have a private space for family or guests to stay when they're visiting.
- If you don't want to rent it, you could put it on Airbnb for the weekends for a little extra income.
- It could give you space for things like like a home office, art studio, kids play house, or band practice space.
However, having a second unit may not be for everyone:
- It's more liability/responsibility in general. You'll need to maintain your own house and the second unit.
- If you lease the unit and depend on it for income, having a vacancy, a tenant that stops paying rent, or a disruptive tenant can create a cash flow issue.
- If you don't have separate utility meters (water, gas, electricity, etc.), you may have some unexpected expenses if your tenant goes a little overboard one month.
If you're looking for a property with a second-unit in Redwood City, drop me a line. I have plenty of experience helping clients purchase and lease investment properties.
Cliff Whearley has been a resident of Redwood City for 23 years. He is a Realtor at Dwell Realtors, Inc. and has been practicing real estate since 2007. If you have any real estate questions, he would love to help!