Sean Pavone/Shutterstock
In 2015, Marni Leiken, a single mother who works as a university administrator, purchased a home in Montpelier, Vermont.
Leiken planned to put an apartment above her new carriage barn, a hallmark of Vermont architecture that refers to a small outbuilding where horse-drawn carriages were stored. The rental property, she thought, would bring in additional income that would help her pay her mortgage. But the barn was structurally damaged, she learned, and adding a unit on top of it would be costly.
She ran out of money and had to put the project on hold. Then, in 2019, she made a discovery: The Vermont State Housing Authority was offering homeowners cash to build accessory dwelling units, or ADUs, on their properties.
The program provides grants to eligible homeowners to build an additional housing unit on what was a single-family lot. Leiken received $30,000, which enabled her to finish the project and eventually find a renter.
Leiken is part of a growing group of homeowners looking to ADUs as a means of creating supplemental income. At the same time, ADUs — which range from garage apartments like Leiken's to freestanding tiny homes — create more long-term housing in their communities by increasing density. That's why governments from California to New York are launching ADU-financing programs that give qualified homeowners the assistance they need to build these often-costly additions.
Courtesy of Marni Leiken
Take California: In 2022, thousands of homeowners received a $40,000 check from the state to build tiny homes in their backyards. And New York's Plus One ADU Program, which provides grants of up to $125,000 to homeowners who build an additional housing unit on their property.
Vermont, for its part, is planning to expand its program, raising its ADU construction-cost reimbursement to $50,000, according a post by the state's housing and community department in local news outlet Seven Days.
Building a rental property helped make it financially possible for her to live and thrive in Vermont, where the cost of living is above-average for the nation.
"I definitely needed that extra income that a rental unit provides," Leiken told Business Insider.
To be eligible for the program, Leiken had to commit to residing on the property herself, promise that her ADU would not be listed on short-term-rental websites, and guarantee that it would be rented at market rate for a minimum of five years.
In all, the $20,000 grant and $10,000 no-interest loan ended up covering about half the cost of the ADU. Leiken had to put at least 20% of the grant funds toward construction costs and lay out the initial project expenses upfront while waiting for reimbursement.
Courtesy of Marni Leiken
Despite the cost, Leiken said she's happy, noting that the additional rental income helps cover her monthly expenses. Leiken declined to say how much she charges in rent, but a one-bedroom currently on the market in Montpelier is currently asking $1,450 a month.
"The rent goes towards my mortgage every month and my utility bills," she said. "It makes my life and my family's life much more financially stable."
Beyond the rental income she's receiving, Leiken is pleased that she's also helping provide housing to locals who need it.
"The housing crisis is severe, but this is an opportunity to contribute to making a change. It's not entirely altruistic, as I benefited from it, but certainly, it can be part of the motivation for people," she said. "For Vermont, which is very expensive, it made being here financially possible."
