A Landlord and Tenant’s Guide to Granny Pods for Senior Living

From young couples to large families, landlords come across various types of tenants. 

Some families not only have kids to raise, but elderly parents to care for. As a landlord, it’s important to understand the needs of your tenants and offer a safe and comfortable living situation for everyone involved.

According to the United States Census Bureau, within the next three decades, the senior population is expected to more than double. This makes investing in senior-friendly rentals a smart long-term investment. One option that has become increasingly popular is granny pods. A granny pod allows seniors to live with family while still maintaining independence.

Keep reading to learn everything you need to know about granny pods and why managing one is the perfect long-term investment. 

What Are Granny Pods?

A granny pod is essentially a modified guest house, usually found in the backyard of a property, that allows caregivers proximity to aging parents or loved ones. Granny pods have a variety of names including “in-law cottages,” “granny shacks,” or accessory dwelling units (ADUs).

The typical size of these units is between 250 and 900 square feet. These are typically designed with wheelchair accessibility and safety features in mind so that seniors and caregivers alike can feel comfortable and confident with their living arrangements.

These ADUs have become increasingly popular as more families seek alternatives to assisted living. Between 2009 and 2019, the number of first-time listings of ADUs grew by an average of 8.6% year-over-year. Not only that, but the number of rental listings with ADUs also increased as many towns within the last decade have started to allow them.

Are Granny Pods Legal?

To install one of these units on your property, you have to check the zoning laws in your area and obtain the necessary building approvals required by local agencies. Some municipalities don’t allow ADUs, but some communities have written special ordinances that make exceptions for healthcare-related dwellings. 

Check with your local authority, including homeowner association agreements, and make sure all intended uses of the granny pod have been cleared before moving forward with building or purchasing one for a property.

Anatomy of a Granny Pod

Typically, the inside of a granny pod looks like a mini-sized traditional home. However, there are considerable differences as granny pods are built specifically for the safety of seniors. This means that they will have very open floor plans, wide doorways and hallways for wheelchair accessibility, and even special flooring to avoid any tripping hazards.

Some of the high-end granny pods, such as prefabricated styles, offer advanced features equipped with safety technologies such as:

• Health Monitoring: Discreet monitors that can keep track of important health indicators, like movement, vital signs, and activities. The systems will communicate with caregivers if anything goes wrong.
• Smart Home Features: Door locks, lighting, and heating and cooling systems can be controlled remotely or automatically.
• Activities of Daily Living (ADL) Assistance: Automatic ceiling lifts and special bathroom fixtures allow aid with daily functions like using the bathroom without the need for a caregiver’s assistance.
• 24/7 Virtual Caregiver: A voice-activated virtual caregiver is available 24/7 to assist with daily schedules and medication reminders. If needed, the virtual caregiver can contact a real care provider.

How Much Does a Granny Pod Cost?

The cost of a granny pod depends on many factors, including what type of granny pod you invest in and how many bells and whistles you plan to install. For the simplest of granny pods, expect to pay around $40,000 upfront. For a high-end granny pod with all the safety features, technologies, and amenities needed for quality care and comfort, you can expect to pay up to $125,000.

Although the up-front cost to build a granny pod is expensive, charging rent for these dwellings averages around $2,000 a month. That doesn’t include the main house on the property, so if you plan to rent both residences you have the option to charge them separately or combined for a higher rate.

Benefits of a Granny Pod

For tenants, there is a long list of benefits of granny pods including proximity to loved ones, continued independence, and prolonged aging in place. From a landlord’s perspective, there are more benefits of a granny pod than just happy tenants. 

Improves Property Value

Depending on your local per-square-foot real estate valuation, your property value could increase with the addition of an ADU on your property. Detached ADUs like granny pods have the potential to increase a property’s value by 20–30%. Some projects double the property value compared to the building costs, which practically gives you an instant return on investment. 

Additional Rental Income

A granny pod doesn’t have to be strictly for grandma and grandpa. Having an ADU on your property allows you to rent out the space separately for additional rental income. Since granny pods have added safety features and wheelchair accessibility, renting out the space to seniors or tenants with disabilities could be an option. 

Targets Niche Tenants

Not every rental property has a granny pod. In 2019, only 4.1% of rental listings included ADUs. This means that you’ll be able to advertise your property to niche markets of families who are seeking rentals that offer extra room for elderly family members or loved ones.

Although an extra bedroom could solve this, a granny pod offers way more than just a place to sleep. It gives seniors continued independence since they have their own space and privacy, which is appealing to both seniors and caregivers.

Possible Downsides of Granny Pods 

Although there are plenty of benefits of granny pods for both landlords and tenants, there are a few potential downsides to them. It’s good to consider both advantages and disadvantages before you start the investment. 

Large Upfront Costs

Even though you get your return on investment, building a granny pod takes a lot of money up-front. However, the up-front cost can vary depending on a variety of factors, like whether or not you intend to build one from the ground up or convert an existing structure. 

Potential Legal Issues

Some areas don’t allow ADUs like granny pods, so zoning laws can prevent you from building one. That’s why it’s important to check with your local authorities and to do your research before doing anything else. So for a landlord, this takes a lot of planning and commitment. 

Difficulty Reselling Property

If you plan to sell your property in the future, it’s important to check the value of the other homes in your area. Even though your property will increase in value with a granny pod, if other homes in your neighborhood are valued substantially lower, you may have trouble selling it for their appraised value. This is because it’s easier to sell the least expensive home on the block rather than the most expensive.

Types of Granny Pods

There are different ways you can install a granny pod on your property including building one from scratch, converting an existing structure, or installing a prefabricated granny pod. We’ve broken down the process and considerations for each option so you can consider which is best for you.

Build a Granny Pod

The first option is to build a granny pod from scratch. To do so, you’ll need to purchase building plans and hire a contractor, but this option gives you a lot of room to customize the granny pod to your target tenant’s needs. 

Things to consider:

• The layout should be open and safe so that tight corners won’t become hazards.

• Hallways, bathrooms, and living areas should have extra room for wheelchair accessibility.

• The entrance should be level with the ground.

• Install safety features like rubber floors, safety bars, and lighted floorboards to prevent potential falls or accidents.

• Smart home features like automated safety locks and health monitoring systems are bonuses that makes the granny pod even more valuable.

Convert a Preexisting Structure Into a Granny Pod

If you have a pre-existing outbuilding or shed, you could convert it into a granny pod. You’ll still need to purchase building plans and hire a contractor for the job, but this option can save you not only time but money as well. 

Things to consider:

• Confirm that your pre-existing structure is between 250 and 900 square feet.

• When designing, make sure there will be enough space to keep an open layout for fewer hazards and wheelchair accessibility.

• Just like building from scratch, you should Install safety features like rubber floors, safety bars, and lighted floorboards to prevent potential falls or accidents.

• Installing technologies like automated safety locks and health monitoring systems is also an option to make your granny pod more valuable.

Install a Prefabricated Granny Pod

The simplest option is to buy a prefabricated granny pod from a company that specializes in these types of units. They can come with all the safety features and modifications needed for exceptional care and comfort while making the process of planning and installing one much easier.

Things to consider:

• You must have cement blocks or a permanent foundation to install one on your property.

• Coordination and monitoring services of important health factors could be included or are available for an additional fee.

• A standard prefabricated granny pod is designed for safety, but you can elevate the unit by choosing to design it to resemble a traditional home.