A Guide to Accessory Dwelling Units
The term “ADU,” short for Accessory Dwelling Unit, might be a new term to you, but it’s not a new concept at all. You’ve probably seen more ADUs than you realize, some of which you’ll recognize from popular TV shows and movies. From Fonzie’s over-the-garage unit in Happy Days to attic and basement units in Full House to Nick Carraway’s cottage in The Great Gadsby, multiple shapes and styles of ADU homes are featured.
What is an Accessory Dwelling Unit?
Simply, an ADU is a small self-contained livable space on a lot that also houses a full-sized residential home. ADU housing must be a permanent structure, so a trailer or motor home is not considered an ADU. It typically has a proper foundation or is attached to a primary residence.
The sizes of ADUs vary by municipality and zoning requirements. Be sure to check your local municipality regarding applicable building and zoning codes. You can’t build ADUs on any property regardless of whether the residence owns the property. Some cities or municipalities don’t allow ADUs, and some have restraints on size and type.
Types of ADUs
There are quite a few varieties of ADU styles. From new construction to converting existing space, you may not even realize all of the options you have for building your own ADU.
Detached ADUs
Detached ADUs are independent and not connected to the main house. They can be built above a garage with a private entrance or made as a stand-alone structure on the property of the main house.
Attached ADUs
The attached ADU is connected to the primary residence and often has a separate, private entrance to the unit. Attached ADUs can be a built-out addition to an existing home or a conversion of a structure that’s already built, such as a breezeway or attached garage.
Interior ADUs
Attics and basements are most commonly converted to interior ADUs, although you can alter any extra space in a primary residence to an ADU. If you have a large bonus room or a second living room, there could be an opportunity to transform the space into an ADU.
Junior ADUs
A great option if you have limited space is a Junior ADU. Junior ADUs are under 500 square feet and must be inside or attached to an existing structure. These requirements mean you can’t build a new stand-alone Junior ADU on your property. Another perk of Junior ADUs is that they don't require a dedicated bathroom if one is accessible within the primary residence.
What to consider when building an ADU
There are pros and cons to building an ADU. Whether you’re considering an ADU for a family member, looking for new ways to receive rental income, or wanting to add value to your property, you’ll want to consider the items below before deciding.
Where can ADUs be built?
The first and probably most important step to complete before starting the build of your ADU is to check with your local municipality and ensure you are legally allowed to build an ADU on your property. You will most likely need an ADU permit before starting any construction.
Although ADUs are growing in popularity nationwide, some municipalities don’t allow new construction, additions, or conversions to your home or property. Some cities have specific zoning and permitting requirements.
Once you determine if you can start your ADU project, it will be essential to work with a contractor familiar with local requirements for ADUs. Many companies specialize in ADUs and have a robust portfolio to showcase their work.
How much does it cost to build an accessory dwelling unit?
An important fact to remember is that although ADUs are small, they are still a complete home. Trying to fit in all desired amenities is often more time-consuming than planning out a regular-sized residence.
Much like building a home, the cost to add an ADU to your property can vary greatly. If you’re conducting a simple garage conversion, it might only cost $30,000. If you’re purchasing a prefab detached ADU with all of the amenities of a home, you can easily spend over $100,000.
There are also hidden costs that you may not take into account initially. These may include necessary utility upgrades, site work to prepare your property for the foundation or structure, upgrading interior finishing work, and even unplanned delays in construction time.
Building an ADU is an investment that you shouldn't take lightly. Financing may be available depending on your choice of build type. Some prefab ADUs may have more accessible financing options from the manufacturer and lenders who specialize in financing ADUs.
Adding an ADU to your property may increase its value, which in turn will raise your taxes. Speak with your tax advisor to ensure the cost doesn’t outweigh the reward. If you’re planning on building an ADU for rental income, but your taxes are significantly higher due to the ADU, it might not be financially worth it to you.
How should I design my ADU?
The short answer is however you want, as long as it abides with your local building code. Seriously, the sky is the limit, and there are so many fun options to consider when building out your ADU. Are you renting it out as an Airbnb? Make it fun and build it to a specific theme for your location. In-law dwelling? Build it with their hobbies in mind, like ensuring ample kitchen space for cooking or a nook for arts and crafts.
A detached ADU design has the benefit of being able to be built to blend with other buildings. Mimicking the style of your primary residence will be more socially acceptable and visually pleasing to the community. Some municipalities may have requirements on roof style, color, etc.
Are prefab ADUs worth the cost?
If you want to take the guesswork out of your ADU build, have financing options, and a warranty from a proven, reputable company, prefab ADUs are the way to go. Prefab ADUs are highly energy-efficient, sustainable,
What are the benefits ADUs?
There are so many reasons that ADUs can benefit you and your community. Many large cities are experiencing a housing crisis. Housing, in general, is often unaffordable, requiring people to have roommates in spaces not designed for multiple dwellers.
Society is shifting to have smaller families. Most homes are designed for four or more people. Over the past 60 years, the average household size dropped from 3.33 to 2.51 people per household, according to 2021 US Census data. Think of how many affordable housing options we could offer the lower percentile if we built more ADUs!
ADUs can be cost-effective
Depending on your municipality, initial building costs (is your ADU new construction or a conversion of an existing room or unit?), and long-term goals, ADUs can be very cost-effective. Typically, you utilize existing utility access and roads or driveways. Building on your property can return an immediate profit to your investment once the ADU is complete.
ADUs provide affordable living options for smaller households and are commonly in cities that offer shopping, public transportation, and schools nearby. ADUs are great options for college students or someone fresh in their career trying to cut expenses where possible.
Good for the planet
With their small environmental footprint, ADUs can be another way to support our planet. Due to their small size, ADUs use less power and water than full-sized residences. If you live in a municipality with incentives for solar energy, you can add solar to your ADU for a more sustainable unit. You might even be able to power your ADU for free if you qualify for net-metering or other solar incentives.
Neighborly
No one wants an ugly building added to their community. You can build ADUs to align with the style and lines of your primary residence so they aren’t an eyesore to your neighbors. ADUs also add affordable housing options, which could help diversify your community and support more local businesses
What are the cons of ADUs?
There could be some cons to adding an ADU to your property. You’ll want to ensure you have a clear vision for long-term goals to determine if the pros outweigh any cons.
Additional expenses
As we mentioned before, you may incur additional taxes by adding an ADU if your property value increases. A new ADU will add additional water and power expenses. This statement is obvious, but it might be beneficial to determine the extra cost to ensure you have budgeted for the expense of the new dwelling unit.
Rental maintenance
If you’re planning on renting your ADU as an Airbnb or a long-term rental, the upkeep of the ADU will involve more maintenance. Odd jobs around the property might be a perk for you if you're a handy person, but you should consider this added expense if you need to hire help.
Although small, ADUs still take up space
If you have a small lot and need the space down the road, you might want to focus on an interior ADU instead of detached new construction. Maybe your dream is to rebuild a classic car, and you want a carport where that ADU would go. Maybe Fido needs that backyard space for themselves, or you want a garden in the future.
How do I start planning my ADU build or install?
A quick Google search will leave you with endless research options regarding ADUs. It would be best to start with your local municipality or a high-level state search to get things rolling. Many cities and municipalities have resources for ADUs and even directories for contractors or prefab manufacturers.
Once you learn what ADU permits are required, you can start building your dream backyard cottage ADU, garage ADU, or simple attic studio ADU and help make more affordable housing options available.
