Carla Fried: How to bring an aging parent close – but not too close

Carla Fried, on

Published in Business News

California has new regulations in place this year that will make it much easier for homeowners to build ADUs, overcoming years of zoning and NIMBY (not in my backyard) concerns. By one estimate, as many as 380,000 single family homes in Los Angeles may now qualify to construct an ADU on their lot.

The cost for a detached unit can be north of $200,000. Converting a garage will typically run less. In high-cost Los Angeles, a recent estimate for converting a garage was around $120,000 or so. (Basements, with their stairs, are probably not best for the elderly.)

Before you dismiss the idea as too expensive, think through the possibilities. If your parent currently owns a home, would the gain at sale finance the ADU or a big chunk of it? If not, a fixed-rate home equity loan or a home equity line of credit are both financing options. In terms of repayment, don't be shy talking through with a parent what part of their monthly income (Social Security, other savings, etc.) they can contribute to the household. It just might be what you need to pay back a loan.

It can also be helpful to consider what expenses you might be able to avoid, or at least shorten the time they are needed if you move family close. If your parent stays in their own home and eventually needs care, that is going to cost plenty. The current average monthly cost according to a national survey is around $4,000 or so for a home health aide or residence at an assisted living facility. (You can find typical costs in your state with a web search of "Genworth Cost of Care.") That's $50,000 for one year. Granted, just because you have an ADU doesn't mean there will be no need to hire help for your parent. But when you might need to start adding care, and the amount of care needed might be less if you are close by and not worrying if your parent is OK on their own.

Even if you end up shouldering much of the construction cost, that peace of mind can be worth far more. And its value will outlive a parent. Maybe it eventually becomes a transition pad for still-launching adult kids. Or a rental that generates valuable income as you head into retirement. And ultimately, at some point, it's likely to be a desirable feature when you are ready to sell.


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