Are you worried about your retirement income? Looking for ways to boost it? If you have heard about the popularity of ADU’s, did you know they can provide extra income as a rental unit on your property? If you use funds from a reverse loan for its construction, it could be a superior solution for extra income each month and you would not be required to make a monthly payment on your reverse mortgage.
ADUs are secondary housing units that can be added to your existing property, providing you with a valuable source of rental income. Not only do they help address the affordable housing crisis, but they also offer a fantastic opportunity for homeowners to generate extra revenue during retirement.
But what about reverse loans? Reverse loans, also known as reverse mortgages, allow homeowners aged 55 for Jumbo Reverse Loans or aged 62 for the FHA HECM reverse loan or older, to convert a portion of their home equity into cash. This can serve as a supplemental income source during retirement, enabling homeowners to access the value of their homes without having to sell or move.
With a reverse loan, the borrower continues to own their home and the Lender never takes possession of it. The Title stays in the name of the borrower, just like on a traditional mortgage.
By combining these two options, you can unlock even more potential for increasing your retirement income. There could be cash from a reverse loan to build an ADU or use the funds from it to increase monthly cash flow.
What are ADUs?
ADUs are accessory dwelling units that homeowners can add to their property, either as a separate unit to the main house or as a conversion of an existing structure. ADUs are also known as granny flats, backyard cottages, or in-law units. They can be used as a source of rental income, a place for aging parents or adult children to live, or even as a home office or studio.
ADUs are becoming increasingly popular as a means of addressing the affordable housing crisis and as a way for homeowners to generate extra income. They offer a way for homeowners to make the most of their property and take advantage of unused or underutilized space.
ADUs come in different shapes and sizes, depending on the local zoning laws and building regulations. They can be attached or detached to the main house and can range from a small studio apartment to a larger, multi-room unit.
Advantages of building an ADU for retirement income
Adding an ADU to your property can offer many advantages for generating retirement income. Here are some of the benefits of building an ADU:
ADUs can provide homeowners with a valuable source of rental income. By renting out an ADU, homeowners can generate extra income that can help supplement their retirement savings. Depending on the local rental market, an ADU can generate anywhere from a few hundred to a few thousand dollars per month.