What Is an ADU? (Accessory Dwelling Unit)
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Richard Haddad Executive EditorClose
Richard Haddad Executive EditorRichard Haddad is the executive editor of HomeLight.com. He works with an experienced content team that oversees the company’s blog featuring in-depth articles about the home buying and selling process, homeownership news, home care and design tips, and related real estate trends. Previously, he served as an editor and content producer for World Company, Gannett, and Western News & Info, where he also served as news director and director of internet operations.
In the current economy, many homeowners are looking for ways to add space, increase property value, or create rental income. To accomplish this, some are turning to ADUs — short for accessory dwelling units. But what is an ADU? Would an ADU be a good addition to your home?
This brief guide explains what an ADU is, the different types available, and key factors to consider before building one.
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What is an ADU?
An accessory dwelling unit (ADU) is a smaller, secondary housing unit on the same property as a primary home. In most cases, these units go beyond a man cave or she shed; they’re fully functional living spaces, typically with their own entrance, kitchen, bathroom, and sleeping area. ADUs can be used to house family members, generate rental income, or increase your home’s property value.
A medium to large ADU will range from 600 to 1,200 square feet. Many state or county jurisdictions limit ADUs to no more than 1,200 square feet. The number of bedrooms an ADU can have may also be restricted by local building codes.
Examples of ADUs
If you’re thinking about adding an ADU, you have options. Of course, which type you choose will depend on your property and purpose. You’ll want to think about how you want it to look and function. (See our six assessment questions later in this post.)
Here are five examples of different accessory dwelling units:
- Detached ADUs: A separate unit in the backyard, often called a guesthouse, casita, granny flat, or mother-in-law suite.
- Attached ADUs: An addition to the primary home with its own entrance.
- Garage conversions: A former garage transformed into a living space.
- Basement apartments: A finished basement with an independent entrance, kitchen, and bathroom.
- Above-garage units: A living space built above a detached garage.
Perhaps you want a JADU: A junior accessory dwelling unit (JADU) is basically a smaller version of an ADU, usually no more than 500 square feet — or about 25 feet by 20 feet. JADUs are often created by converting existing space inside a home, such as an extra bedroom or attached garage. This might be a more affordable option if money is tight.
Does an ADU add value to a home?
ADUs typically do add value to a home. What’s more, they can be a powerful selling point when you decide to list your home on the market. Many buyers today are looking for space for an aging parent or a child struggling with housing costs. However, the impact on your property value will depend on factors like location, quality, size, and local ADU rules.
For example, sales data in Portland showed that homes with ADUs sold for 8% to 11% more, while a study by the National Association of Realtors (NAR) found the value boost could be as high as 35%. According to the NAR report, ADUs held the most value in large cities.
Can you build an ADU on your property?
Whether you can build an ADU on your property can depend on where you live. Some states, like California, Washington, Oregon, Connecticut, Maine, and New York, have enacted laws or ordinances that encourage ADU development. Cities in these and other ADU-friendly states have more relaxed zoning restrictions, reduced permit fees, or simplified approval processes.
In contrast, other states and municipalities have strict zoning laws that limit or prohibit ADUs. Before making plans for an ADU, be sure to check with your local zoning office or ask a real estate professional to explain what’s allowed in your area.
How much does it cost to add an ADU?
Just as the price of homes can vary widely depending on location, design, materials, and size, so too does the cost of building an ADU. According to Angi, the normal range is $60,000 to $285,000. Here are some averages based on ADU type:
- Basement conversion: $60,000 to $150,000
- Garage conversion: $60,000 to $150,000
- Attached new construction: $100,000 to $216,000
- Above-garage construction: $128,000 to $225,000
- Detached new construction: $110,000 to $285,000
If you’re going for a JADU, the price tag might fall in the $25,000 to $60,000 range.
But keep in mind, your final cost will also depend on what it takes to extend utility hookups to your ADU, such as plumbing, electrical, and sewer lines.
Financing an ADU? You can offset building costs by financing your ADU through home equity loans, cash-out refinance, construction loans, or — where available — local ADU grant programs. You might also consider taking out a 401(k) loan. To learn more, see Freddie Mac’s Accessory Dwelling Unit FAQ page.
Pros and cons of adding an ADU
Pros
- Can boost your property value: An ADU can boost your home’s overall worth, especially in high-demand areas, such as a university or retirement city.
- Potential for rental income: Whether now or later, renting out an ADU can generate additional income.
- Creates a flexible living space: An ADU can be ideal for aging parents, adult children, college students, or visiting guests.
- Supports multigenerational living: Let’s face it, we love family, but there are benefits to having them close but not too close.
- Potential tax benefits: Some states offer tax incentives for home improvements, such as adding an ADU.
Cons
- You’ll pay high upfront costs: At first, building an ADU requires a significant investment and may involve some risk if you need to borrow money.
- Permit and zoning challenges: Regulations vary by location and can limit your options. Do your research to avoid surprises.
- Potential property tax increases: Adding an ADU (increasing your property’s square footage) may raise your home’s assessed value.
- Aesthetic impact (how it looks): Depending on the design you pick, an ADU may not complement your property’s appearance — which could be an issue when it’s time to sell.
- Neighborhood disputes: Not everyone loves an ADU. Some neighbors might oppose what you are building due to concerns about blocking views, noise, parking, or traffic.
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Should you add an ADU? 6 questions to ask first
If you are considering adding an ADU, here are six questions that can help you make plans:
1. How will you use your ADU?
2. Who will be living in your ADU?
3. What special amenities might you need? (e.g., a wheelchair ramp)
4. What features can you skip? (e.g., a full kitchen or laundry room)
5. Can you invest enough now to do it right?
6. What’s more important to you, aesthetics or function?
For expert insights into your market, HomeLight recommends reaching out to a top local real estate agent. They’ll have first-hand experience to help you make confident decisions about adding an ADU or selling a home with an existing ADU.
ADU FAQs
Yes, most areas require permits for ADU construction. The process varies by location, so check with your local building department for specific requirements.
An ADU typically connects to the main house’s water, sewer, and electricity lines, though some jurisdictions require separate hookups.
Traditional ADUs will usually have a functional kitchen, although they are often more compact. Depending on state or local rules, your ADU may actually require a kitchen or kitchenette.
A knowledgeable real estate agent can help you decide how an ADU might impact your home’s value, rental potential, and marketability. They can also help you get a better idea about zoning laws and what permit requirements you may need to tackle.
Header Image Source: California Department of Housing and Community Development
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