What is an ADU?

What Is an ADU — And Why Are More Homeowners Choosing to Build One?

If you’ve been hearing the term “ADU” pop up more often lately, you’re not alone. ADUs, or Additional Dwelling Units, are one of the hottest trends in real estate and homeownership today. But what exactly are they, and why are so many people choosing to add one to their property?

Let’s break it down.

What Is an ADU?

An Accessory Dwelling Unit (ADU) is a secondary living space built on the same lot as a primary home. ADUs can be attached (like a converted garage or basement apartment) or detached (a separate small house built in the backyard). They typically have their own entrance, kitchen, bathroom, and living area, making them completely independent from the main home.

You might also hear them called:

• Granny flats

• In-law suites

• Backyard cottages

• Carriage houses

• Secondary units

Each city or state may have slightly different rules about size, design, and how ADUs can be used, but the basic idea is the same: a small, fully functional home on your property.

Why Are People Building ADUs?

There are a lot of reasons why ADUs have become so popular. Here are a few of the biggest:

1. Extra Rental Income

One of the top reasons people build ADUs is to rent them out. Whether it’s a long-term tenant or a short-term rental like Airbnb, ADUs offer a great way to generate passive income. In high-demand areas, the rental income can help offset mortgage costs or even fund retirement plans.

2. Housing Family Members

Many homeowners build ADUs to provide a comfortable, private space for aging parents, adult children, or extended family. It allows families to stay close without sacrificing privacy—and can be a more affordable alternative to assisted living or separate apartments.

3. Increased Property Value

Adding an ADU can significantly boost your property’s value. Buyers often see them as a major bonus because of their flexibility—whether for extra income, guest space, or future needs. In some markets, a well-designed ADU can add hundreds of thousands of dollars to a home’s resale value.

4. Flexible Living Space

Need a home office, an art studio, a workout space, or a guesthouse? An ADU offers endless possibilities. Having a completely separate area from your main living space can make life a lot more convenient—and can adapt as your needs change.

5. Affordable Housing Solutions

In many cities, especially where housing costs are high, ADUs are seen as a creative solution to the housing shortage. They add living spaces without dramatically changing the character of a neighborhood, and they offer more affordable options for renters.

Things to Know Before Building an ADU

While ADUs offer tons of benefits, there are a few important things to keep in mind:

• Local Regulations: Every city and county has different rules about ADUs. You may need permits, and there could be restrictions on size, height, or rental use.

• Cost: Building an ADU isn’t cheap—it can range from $50,000 to over $200,000 depending on the size, type, and quality of the build.

• Financing: Some homeowners use home equity loans, construction loans, or special ADU financing programs to fund the project.

• Design & Functionality: A well-thought-out design that maximizes the small space is key to making an ADU comfortable and functional.

Final Thoughts

Whether you’re looking for a new source of income, a flexible living space, or a way to keep family close, an ADU can be a smart and rewarding investment.

Interested in learning more about homes with ADU potential—or curious about building one on your current property? Let’s chat! I’m happy to help you navigate your options and connect you with trusted local resources to get started.