Vets and ADU's

Veterans and ADUs: The Secret to Creating Passive Income with Your Home

real estate| Veterans
September 20, 2023•2 min read

Want to turn your home into a cash-flowing asset? For veterans, the key might be in the backyard.

Accessory Dwelling Units (ADUs)—also known as granny flats, in-law suites, or backyard homes—are becoming a powerful tool for veterans who want to generate passive income without buying a separate investment property. And the best part? You can do it right on your existing VA-financed property.

Here’s how veterans are making it work:

What’s an ADU?

An ADU is a self-contained living space on the same lot as a primary residence. It can be:

  • A converted garage

  • A detached tiny home

  • A basement or attic apartment

  • A portion of your house with a separate entrance

These units can be rented out long-term or short-term, depending on local laws—turning unused space into monthly income.

Why ADUs Are a Smart Play for Veterans

  • Generate Passive Income: Rent out the ADU to supplement your VA pension, BAH, or civilian income

  • Create Multi-Generational Housing: House aging parents or adult children affordably

  • Increase Property Value: Homes with ADUs can see a significant boost in resale value

  • Live for Less: Some veterans choose to live in the ADU and rent out the main house for maximum cash flow

Can You Use a VA Loan to Build or Buy a Home with an ADU?

Yes—with some conditions. The VA allows for ADUs if:

  • The property meets VA minimum property requirements

  • The veteran occupies the primary residence

  • The ADU is legal per local zoning and building codes

You can also:

  • Purchase a property that already has an ADU using your VA loan

  • Refinance with a VA renovation loan (or alternative funding) to add an ADU later

Cities Supporting ADUs for Veterans

Several cities and states have updated zoning laws to encourage ADU construction—especially for veterans and low-income families. Some even offer grants or incentives to build one.

Hot ADU-friendly markets for vets:

  • San Diego, CA

  • Austin, TX

  • Denver, CO

  • Portland, OR

  • Atlanta, GA

Real-World Example

A Navy veteran in Los Angeles used her VA loan to purchase a property with a converted garage ADU. She lives in the main house and rents the ADU for $1,500/month—more than covering her mortgage while still retaining full property ownership.

Bottom Line:
ADUs are a smart way for veterans to turn their property into a powerful wealth-building tool. Whether you want to house family, generate income, or increase your property’s value, a well-placed ADU can help you do it—all while staying close to home.

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