If you own a home in the City of Santa Clara you may have buried treasure in your backyard, especially if you are sitting on at least a 7,000 square foot lot. The City offers a program when you can legally build up to a 640 square foot accessory unit (Granny Flat for the politically incorrect) that you can rent out for extra income. The 640 square foot unit can either be a single story detached unit or it can be a unit that is built over a garage. I have had an opportunity to build four of these units in Santa Clara over the years and I am amazed at the amount of rent that these backyard units will fetch right now. Most of these newer (less than 15 years old) one bedroom cottages are getting anywhere from $1450 to $1650 per month. I have sold several homes for people who had back yard cottages and the demand for these homes is incredible. Having that extra income to help offset a $4,000 a month mortgage payment can sometimes make the difference for a family to be able to purchase the home or not.
The other advantage of having a back yard cottage would be for families who have young children and can justify moving a parent into the cottage instead of paying for monthly day care. Most people would rather have a retired Nana or Papa watching their child instead of sending them out to a kid watching factory every day.
If you have a son or a daughter who will be going to college locally and who can’t afford to live in a dorm having this cottage for them can be a great alternative. It gets them out of the home but it still gives them their privacy from mom and dad or other siblings. So look at your old title report and find out if you are one of the 4580 homes that are sitting on a 7,000 square foot lot in Santa Clara. If you are, then you may have just found buried treasure in your backyard.
Fred Raia is a local real estate broker and developer in Silicon Valley.
The Cost and the Process of building a Back Yard Cottage.