Are Accessory Dwellings in Ann Arbor a good option for you?
Updated: Dec 4, 2018
You might have thought that it could be a good investment to have an income property in town, since there is a relatively high demand for rental units. Many are apartments, but there are several houses that either have been converted to multiple units within the house, some are duplexes, and a handful of people choose to just rent the home as a single family unit.
Back in 2016, the city of Ann Arbor adopted an ordinance to allow what they call Accessory Dwelling Units or ADUs, sometimes called Accessory Apartments, or Mother-in-law-apartments on an existing home. Basically you could convert your garage, or build something on your property and turn it in to a rental unit to rent out to non-family members within the city. They were an option that had gained some popularity with home owners in other cities. The city of Portland has this in place, and Ann Arbor thought that they could adopt something similar here. The idea being that it could add more affordable housing to the area, and be an income option to a home owner.
The city is worried that too many of these could pop up all over town, and be a bit out of control. So they have put some serious restrictions on them, for example, the unit has to have its own sewer and water line to the street. The cost for that is tens of thousands of dollars to do. They also put stricter zoning requirements on them so many neighborhoods don't qualify to have them even if a home owner wants to do it. There are also size of lot restrictions, which as you might know, in some the more densely housed neighborhoods in Ann Arbor, where there might be a demand for them, they simply can't be built per the restrictions. To date, as you might have guessed, zero people have filed for a permit to have such a dwelling on their property, and the city was curious to why.
This past summer they held 3 public input meetings to see what might be needed to be done to encourage people to perhaps want to have these. Based on the feedback they are making changes in the ordinance to encourage people (well someone anyway) to participate with this program. It seems that they got some good feedback from people who would have considered it, but found it to be either way to cost prohibitive, or the zoning ordinances rendered them unable to build them. Ann Arbor is still concerned about the number of them, but want home owners to participate. If you'd like to read what the proposed changes are, a link to the city website to the PDF file is here.
Hopefully they will take the public feedback to heart and make changes in the ordinance to allow for these to be easier to create, although the city still doesn't want to become overpopulated with them.
Being a landlord isn't for everyone, and ADUs might not be the option. Investment properties have challenges. Some may want to use a property manager, others are good at handling the duties themselves. But regardless, if you are considering an investment property, there are options that might be possible for you. Let me know what you're thinking about and we can talk to see what might be your best plan.