invest where you live - backyard cottages

A backyard cottage can be used for many things, a home office, housing an aging family member, and as an investment strategy generating rental income.  Backyard cottages have distinct advantages over most investment properties. Their construction may often be financed with an inexpensive equity line of credit and they don’t have land costs. As a result, rental cottages can reasonably be expected to generate a net rate of return more than double most rental properties.  


The real estate downturn and low interest rates may make the thought of purchasing an investment property appealing. Here in the Northwest we have a plethora of vibrant forward thinking industries  and abundant natural resources and intellectual capital.  Washington state is the only state in the U.S. that has a trade surplus with China and our position on the Pacific Rim will benefit from the migration of the global geopolitical center towards Asia.  This all bodes well for long term regional growth.  Perhaps because of this buying a two bedroom house in an in-city neighborhood still costs well over $300,000.  With wage growth likely to remain flat for the foreseeable future, buying a house will remain out of reach for many. This will support the rental market. 


A hypothetical $300,000, 2 bedroom, 1 bath, house may rent for around $1,500/Month with tenants paying utilities. Factoring in taxes, vacancy and credit loss, but for the sake of simplicity ignoring depreciation and maintenance,  we have a annual net income of approximately 5% of purchase price.  A hypothetical 2 bedroom, 1 bath, backyard cottage would have comparable rental income but the cost of the cottage would be in the range of $100,000 - $125,000, yielding a return on investment greater than 10%.  


While construction costs are fairly consistent across a region rental rates vary greatly by neighborhood. For this reason backyard cottages in good neighborhoods can generate higher rates of return. A quick check on craigslist can help to get a handle on rental rates in your neighborhood. Microhouse can help put together a proposal regarding your project construction costs. We work with a tested team of engineers, surveyors, and contractors that can insure a smooth design and construction process.  We can also recommend lenders to aid in financing your project. 


Microhouse 
206.632.7115

Backyard Cottages and McMansions

We are seeing people around us cutting back and slowing down. There is a growing trend to downsize and simplify lifestyles. Partially, this is the result of the new economy. The positive side of this trend is a renewed focus on family and friends, and time spent together.  Backyard cottages have a role to play in the new economy allowing extended family to live closer together. Cottage housing also, with smaller interior spaces and an emphasis on shared community space will likely also continue to grow in popularity. 


A compilation of recent data shows further erosion in consumer demand for larger houses. Obviously there are a combination of factors that affect consumer sentiment. The economy and the real estate market being perhaps the biggest two. According to research by Trulia.com 9% of consumers now believe that their ideal home is 1,400-800 sq.ft.. Granted an equal percentage feel that their ideal home is over 3,200 sq.ft. and probably need 800 sq.ft. just to park their hummer, but it is a significant change. For more detailed breakdown see the attached link.


Consumers Declare McMansion Era Over

microhouse featured in highline times

A nice story about microhouse and backyard cottages (detached accessory dwelling units) is featured in the Highline Times. It features an interview with a client who built a backyard cottage for his mother. The cottage allows his ageing mother to live close to family and maintain her indepedence.

burien mother-in-law backyard cottage

magnolia backyard cottage takes shape

Design has started on Microhouse's newest backyard cottage in Magnolia.  Our clients are looking  to use some of the equity in their home to establish a rental property that could be used by a family member in the future. A secondary goal is to provide a home office for personal use. 


The steeply sloped ECA site has its share of logistical challenges as well as opportunities. Using the Eco cottage plan as a design departure point we are able to come up with a cost effective two bedroom design with a minimal amount of site work.  Tweaking the design to take advantage of the site slope we are able to pull the bathroom and circulation outside of the main plan into a tower structure that will house a home office on the top floor. The office can be accessed via a bridge from the main house via a bridge or from the cottage. The dual access allows it to be a third bedroom for the cottage or an office for the owners in the main house.  

 Microhouse -Modified Dragonfly Cottage

Microhouse -Modified Dragonfly Cottage

Microhouse small house plans available nationally

Microhouse small house plans and design services will soon be available nationally through houseplans.com. Microhouse will be one of the featured designers along with the likes of Sarah Susanka of "Not So Big House Fame". We are excited to be able to participate in the small house movement at the national level. This will also enable us to be a part of the growing backyard cottage movement as it spreads east to cities like Denver and Madison.

Ecohaus locations in Seattle, Portland, and San Francisco will continue to provide a great resource for Microhouse patrons.  Their well staffed showrooms are a great place to view our standard finishes and materials.

Rain Garden - Ballard

Here is a photo of a small rain garden designed by Landscape Architect Vinita Sidhu nearing completion Ballard. The garden is designed to handle the roof runoff from an existing garage. During heavy storms and prolonged periods of rainfall the rain garden will briefly fill with rainwater. The owner chose a decorative rain chain to connect the gutter to the inlet providing visual interest even during periods of light rain. 

The rich soil mix chosen for the rain garden forms a depression that will collect the water like a sponge slowly releasing it into the ground. Water loving native plants will thrive here.  Prior to the installation, the runoff was collected by a combined sewer system, pumped, treated and discharged into the Puget Sound.

Atom Prefab Cottage -Small House Plan of the Month

Our newest new small house plan the Atom. The idea for the atom cottage comes from a 1940's prefab house built by the U.S. Government as worker housing at Hanford.  1,200 of the small modern units were built. Many still exist including the 400 sq. ft. one bedroom model that I lived in for a year during college.

Infill cottage housing for volunteer workers, I thought, would be a great re-purposing for this house. In Richland, when the houses were originally built, land was in abundance and the car was king. The current proposal for an undeveloped urban infill site, requires a more compact footprint and greater emphasis on community. To date, two plans have been developed. One 200 sq. ft. studio loft unit and one 400 sq. ft. 1 bedroom unit. Contact us for pricing and additional information.