If you live in a tourist area, your backyard can be an extra source of income. We’ll explain.
Imagine hosting travelers in a cozy, stylish cabin right in your backyard, making the most of the natural beauty around you while generating extra income. With prefab cabins, you can bring your imagination to life and start earning with Airbnb rentals or other types of rental platforms.
In this blog, we explore how prefab cabins offer homeowners a much more budget-friendly and trendy solution for building profitable ADUs in tourist-rich areas.
Prefab Cabins and ADUs: Understanding the Difference
As the demand for additional living spaces grows, homeowners today are exploring options like prefab cabins and additional dwelling units (ADUs) to expand their property’s potential. While many people use these two terms interchangeably, they are distinct structures with unique characteristics.
On one hand, ADUs are secondary housing units located on the same property as a primary residence. As such, they need to be a fully functioning residence with a kitchen, bathroom, bedroom, and living area—see the Ontario Second Suites website for more details. They can be custom-designed internal or attached units as well. In some cases, homeowners may convert an existing structure (for instance, a garage) into their ADU.
Both types of units can be modular and built off-site in a factory and then transported to the desired location for assembly. However, prefabricated cabins can be much more simple, oftentimes without a full kitchen and even bathroom (if an outhouse and/or bathroom is provided on-site at another location, These cabins are typically smaller in square footage, designed for quick installation and cost-effectiveness.
You should note that while prefab cabins are technically a type of additional dwelling unit, not all prefab cabins are designed to be used as an ADU. Most importantly, cabins are considered short-term rentals and, therefore, fall under a different category of legal requirements (which is important to check with your municipality)!
Boost Your Bottom Line with Prefab Cabin ADUs
Prefab cabins offer homeowners a budget-friendly, efficient, and trendy way to increase their property’s value and generate additional income. Here’s how prefab cabin ADUs can boost your bottom line:
1. Cost Savings
Prefab cabins can be significantly more affordable than traditional ADU builds, and there are several reasons for this. The construction process takes place in a controlled factory setting, which allows for greater efficiency and less waste. As a result, material costs and labor expenses are generally reduced as you’ll typically need fewer on-site workers for the assembly.
In addition, prefab cabins typically feature minimalist designs (many Airbnb guests also prefer this). This means focusing on essential elements and avoiding excessive customization, reducing both initial investment and ongoing maintenance costs. See our Eden Lifestyle Series for examples of units that could be a short-term, off-grid cabin rental.
2. Faster Rentals
Since assembly typically takes a few days (especially if you are going off-grid!), you can typically have your prefab cabin up and running much quicker than other ADU options. The efficiency of prefab construction means you can start renting it out to tourists and start making money as soon as you want.
This accelerated timeline maximizes your earning potential by reducing the time your investment sits idle. The sooner your prefab cabin is ready for guests, the sooner you can start reaping the financial benefits.
3. Tourist Appeal
Prefab cabins generally have a unique charm that blends seamlessly with natural surroundings, making them an attractive option for tourists. Besides, they are also a great appeal for eco-friendly guests looking to reduce their carbon footprint.
With their modern and minimalist designs (usually with large windows) and natural layouts that enhance the connection with nature, prefab cabins’ aesthetic appeal is a significant draw for travelers. Many of the models in our ilo Collection were created with this in mind.
In addition, marketing your prefab ADU as a sustainable and green accommodation option positively positions you in a niche market of guests willing to pay a premium for eco-friendly lodgings.
4. Flexible Usage
Finally, depending on your region, the tourist business can sometimes be seasonal. Thankfully, prefab cabins offer versatile usage options beyond just short-term rentals. They can serve as guest houses, home offices, art studios, or even long-term rental units.
This flexibility allows you to adapt to changing market demands and maximize occupancy rates. For instance, you can list the cabin on Airbnb during peak tourist seasons while renting it out to tenants who need it for longer durations during the off-season.
Besides, a prefab cabin ADU on your property can significantly increase its overall value—whether you’re renting it out or not.
Financing Options for Prefab Cabins
While assembling a prefab cabin as an Airbnb on your property can be a financially rewarding decision, these ADUs do not come cheap. As a result, securing the right financing is crucial to the success of your investment. Thankfully, the Resimate property calculator tool can help you create an informed financial plan for bringing your prefab cabin to life.
That said, here are several financing options available for prefab cabins:
Unlock Equity
You can finance your prefab cabin project with a home equity loan by leveraging your existing property value for a lower interest rate. This option allows you to tap into the equity you’ve built in your home, providing funds at potentially favorable terms.
Strategic Borrowing
You may also consider personal loans or looking into applicable government programs to get your project started. Personal loans offer quick access to funds without collateral, while government programs can provide low-interest loans or grants specifically aimed at supporting ADU development.
Rental Income Pays Back
Another option is to treat your loan payments as an investment, covered by the rental income from your income-generating ADU. By using the rental income to offset your loan repayments, you can effectively finance your prefab cabin while enhancing your property’s profitability.
Wrapping It Up
Ready to transform your property and maximize your earning potential?
Investing in prefab cabin ADUs as Airbnb rentals presents a lucrative opportunity to unlock consistent cash flow, especially if you live in a tourist-rich area. You can make extra income while improving the overall value of your property.
Contact Resimate today for expert consulting and construction services tailored to prefab cabin ADUs. We can also provide you with competitive financing options to turn your backyard dream into reality!
