Is It Worth It to Build That A.D.U.?

Q: We plan to sell our 2,500-square-foot home in the old-town section of Fort Collins, Colo. Our basement has an apartment area, and under the city code we could convert that space to a legal accessory dwelling unit that could be rented, though we would have to pay about $20,000 in fees to the city. We estimate the house might be valued at around $1.35 million, without the A.D.U. Is it worth it to proceed with creating an A.D.U.? Will it raise the value of the house?

A: An A.D.U. might make your home more desirable, but that doesn’t necessarily mean it’s a wise investment.

A.D.U.s come with various regulations depending on where you live, but generally they are separate dwelling units on the same lot as a primary residence, allowing occupants to live independently. They can be internal, attached or detached. Colorado has a law that permits A.D.U.s where single-family detached homes are allowed, and helps ease their construction, though regulations can vary by municipality.

Consider hiring an appraiser who will report what your property is worth as it is, and what it would be worth with an A.D.U., using data from similar homes in your area, suggested JoAnn Apostol, a certified real estate appraiser in Colorado. The appraiser could also estimate the market rent for the basement A.D.U. for buyers.

Demand varies from place to place, and the wisdom of whether to add one is specific to each property. In a college town like Fort Collins, Ms. Apostol said, demand for rental units like A.D.U.s is high. But it’s very possible that putting in the effort — and the $20,000 — to make this A.D.U. code compliant will not culminate with a profit when you close a sale. You just don’t know what buyers will want.

“Let the person who wants to invest and own it and buy it, let them do it,” said Laura Michaud, a listing specialist with Kittle Real Estate in Fort Collins. “Everyone’s vision will be different.”

Marketing your house as a property that’s A.D.U.-ready might appeal to more buyers than a property that already has one. And it could make more sense financially for the new buyer to do the conversion, because they’ll be the ones who benefit from the rental income, not you.