If you own a rental home, adding a backyard home can significantly increase your cash flow and rate of return.  Depending on the rental market, annual returns can exceed 10% in the first year, and climb thereafter in a rising rental market.  The addition of a backyard home can also increase your rental property’s value.  Building and renting a backyard home on land that isn’t generating a return is a great way to expand your rental portfolio and cash flow.