Aging in Place, Part 2: Long Term Affordability Considerations in House Design

Smaller houses, lower taxes

 This cheerful tiny house became an on site short term rental after hosting us for a few years while we built.

This cheerful tiny house became an on site short term rental after hosting us for a few years while we built.

Over the years, many of us have seen incredible increases in home costs around the country, and in fact, the world as a whole. There are still some places where costs have actually gone the other way, as industries have changed, moved around, etc. but a lot of places seem to have become inexorably (and sometimes alarmingly) more expensive. These changes can occur very quickly and can make for real financial concerns. When you've lived in and loved your home for a long time, to be pushed out by rising property costs seems terribly unfair. Yet it happens. Even if your home is paid off entirely, property taxes never end, and the costs can be substantial. When you're thinking about aging in place rather than resale, upward trends in prices can be a devil in the details.

Incorporate a Rental into your Plans

One of the things we've opted to explore to hedge for this potential is to incorporate a rental into our property. Getaway and weekend rentals have solid demand in our area because it's a vacation town near the water. For the same reason, the likelihood of our property taxes going up in the future is very real. These factors make us feel that a rental is a good investment for us. The nature of a rental might be quite different depending on your location, so this sort of consideration should be a part of your planning stages. Our location is well suited to short term rentals, but other places might better support full time rentals, or even a mixture depending on season. Some areas that might be best suited to incorporating a rental on site (be it an ADU, a mother in law cottage, a separately accessible suite or even an extra room in the home) include locations near natural features that draw visitors, in city locations, seasonally weighted areas (ski towns, lake properties, leaf peeper locations in the NE), areas with colleges nearby...you get the idea. Some areas might NOT carry a demand for a rental enough to justify the extra costs, so you should weigh that into your planning as well. The old real estate admonition about "location, location, location" is always worth a revisit. Another area worth some thought...if you build rental space into your property plan, will you maintain it yourself or hire on helpers to assist with the cleaning? If so, do spend a little time researching those costs. For example, if you're in a remote location and don't want to do the work yourself, it might strain likelihood that someone will drive a long way for a two hour job once or twice a month. Be sure that your location will support your endeavors from start to finish. Taking an appropriately critical and reasoned approach can help when it comes to this process of cost forecasting.

Smaller Houses can be Dynamic too

Extra space on your property doesn't have to be static endeavor either. It can also be a multi functional space depending on your needs at the time - a one time rental could also be great for a future craft studio, home based business, place for visitors, or even a spot a live in caretaker could occupy if needed. There are potential tax write offs for many of these scenarios that could be useful as well.

Plan for the future

If you do decide your location will support the costs and work associated with maintaining a rental on site, you may find yourself with a lot more financial flexibility when it comes to staying in a home or an area that you love for the long haul. No aging in place plan can really work well without giving finances due thought. I can't think of too many more distressing things about building a dream home than discovering a decade down the line that it's become unaffordable. You might not be able to prevent rising real estate related costs, but you can make decisions along the way that cover your bases. There's a lot of comfort in that.