I sat down recently with Brooks Gibbs, the owner of I Live in a Bank. Over a cup of coffee, he shared with me how Utah’s first Accessory Dwelling Unit, or ADU, company started. This is his origin story.
How did you first encounter ADUs?
I was looking for a way to generate a retirement income. I went to the city offices to ask if I could create a basement apartment legally and rent this out. The city planner said in the past the city did not allow this in Single Family Residential Zoned areas, however, the City had recently passed a new ordinance allowing homeowners to put a second living space on their property. It was called an Accessory Dwelling Unit (ADU) ordinance. I went online to find out more on what exactly was an ADU and how it worked. What I uncovered was a tool capable of flipping the paradigm of home ownership from being a monthly expense to becoming an income generating tool.
So you were looking into generating retirement income to supplement your current savings. I’m sure many of us are looking at the future, wondering if what we have saved, or are saving, will be enough. If I Live in a Bank is a result of your own search, what about ADUs made it important enough to risk your own retirement savings on starting it?
That was the issue, my retirement savings were NOT going to be enough for me to retire. I had to find a way to create a continuous income stream that provided me a monthly income without draining my savings. I also needed to have a way of taking advantage of tax reduction benefits. By investing my retirement savings, about $80,000 dollars, in building an ADU to rent out, I could generate $1,100/ month income for the rest of my life and still have growing equity in the investment. Each year the rental income is likely to go up by 3% to 5%, and the property value of my home with the ADU would also increase. In my mind I had nothing to lose and everything to gain!
California, Washington, and Oregon are already seeing impressive success with the implementation of ADUs. They are reducing homelessness, providing additional housing, and a booming short-term rental economy. If you help your audience to understand one thing about ADUs and the ADU process, what would it be?
Interesting question. Most people I talk with about this see only the expense of $100,000 approximately to build a second living space and the monthly dept that this takes to pay back a loan. (Even if it is your savings you should be paying in back as a loan from yourself.) They focus on the monthly payment and in their mind add this to an already strained monthly budget. It frightens them. When they see that the $600 – $700 payment is going to generate a $1,100 to $1,300 a month income, they overcome that fear. It creates more cash in hand to the tune of $400 to $700 each month after their payment on their ADU. You can read more about the West Coast growth here.
What is it about this business that resonates with you? Why?
I already own the property I where I am living. Yet it is costing me monthly to live there. By adding an ADU, my property is now paying me to live there. This is a HUGE flip of the financial home ownership paradigm. It also is a tool to assist with the high cost of assisted living by providing a residence for aging parents that is affordable.
So with your ADU, your property is now an income, rather than an expense. I can see why that would be powerful for so many. What are you wanting to see happen through your business?
I want to assist others in finding ways to create greater peace and security in their daily lives. This is the number one issue on most people’s mind: food, shelter, & safety! Cavemen worried about the same issues. The fear has changed, it’s not carnivorous beasts in the forest like wolfs, bears and mountain lions. Rather, it’s the demands of carnivorous beasts that walk the financial forest like Banks, Groceries and Utilities.