What to know about buying a home with a guest house

A home with a guest house can offer extra space, rental income potential, and privacy for visiting family and friends. But before you buy, it’s important to understand the benefits, challenges, and key details to look for.

1. Decide How You’ll Use the Guest House

Guest houses can serve many purposes:

• Private space for visiting family or friends

• Long-term rental unit for extra income

• Short-term vacation rental (if permitted)

• Home office or studio

• Caretaker or in-law suite

Knowing your intended use will help you evaluate zoning, design, and amenities.

2. Check Local Zoning and Permits

Not all guest houses are legally recognized as separate living units.

• Confirm the structure is permitted and up to code.

• Ask if local zoning allows rentals, especially short-term ones.

• Check for separate utility meters if you plan to rent it out.

3. Consider Privacy and Access

A great guest house setup offers independence and convenience.

• Separate entrance and parking are ideal.

• Adequate soundproofing between spaces improves privacy.

• Outdoor areas should be clearly defined for each dwelling.

4. Evaluate Utilities and Maintenance

• Determine if the guest house shares utilities with the main home or has its own.

• Inspect plumbing, electrical, and HVAC systems separately.

• Factor in maintenance costs — two roofs, two HVAC units, and two sets of appliances can mean higher expenses.

5. Understand Insurance and Taxes

• You may need additional homeowners or landlord insurance.

• Rental income could affect your taxes, so talk to a tax professional.

• In some areas, a second dwelling can increase your property tax assessment.

6. Think About Resale Value

Guest houses can add value for buyers who need extra space or rental income — but they may narrow your market if local demand is low.