What is an ADU? Accessory Dwelling Units Explained

This is for informational purposes - always check with your permitted authority or regulatory body first.

With over 1.4 million Accessory Dwelling Units (ADU) in the United States, homeowners love the options that Accessory Dwelling Units provide. But is an ADU right or lawful for your property? We’ll explain what an ADU is, what qualifies as an ADU, and the costs associated with building an ADU.

What is an Accessory Dwelling Unit (ADU)?

An Accessory Dwelling Unit (ADU) is commonly defined as an independent residential living space on the same property as a single-family home. ADU is its formal name, but many know it by one of its nicknames:

• Mother-in-law suite
• Accessory apartment
• Secondary suite
• Basement apartment
• Granny flat
• Attic apartment
• Backyard cottage

The nicknames are endless because an ADU can be customized to fit the owner's needs. An ADU can be a separate detached living space from the main home or be attached to the existing house as long as it meets the state’s ADU qualifications.

4 Types of ADUs

Regardless of what it would be used for by the owner, ADUs typically fit into one of these four types of ADUs:

1. Detached: This is a separate free-standing dwelling that is not connected to the primary residence.
2. Attached: This is a separate dwelling that shares at least one wall with the main home but does have its own entrance from outside the main residence.
3. Interior Conversion: This is a fully functioning second independent living space within the primary residence. Attics and basements are typical interior conversion ADUs. They may or may not have an entrance from outside the primary residence.
4. Garage Conversion: These are garages that are converted into independent dwellings. It can be attached or detached from the primary residence.

Related Link: I Want to Renovate My House? Where Do I Start?

What Qualifies as an ADU?

ADU Qualifications can vary from state to state, so you’ll want to look up the requirements for your state before you begin your build. That said, most states require that the secondary dwelling have the following qualifications to be considered an ADU:

• Has a shared or independent foundation
• Has a separate utility and water hookup
• Has a complete, fully functioning living space with a kitchen, bedroom, main living space, and a bathroom.

Before you build, you often need to submit applications for building permits to the local government to ensure your ADU complies with all rules and qualifications. Often, this requires a site plan to be submitted with the application.

What Are the Pros and Cons of ADUs?

Before you build an ADU, you should understand the benefits and disadvantages of building and owning an ADU:

Pros of Building and Owning an ADU

• Provides a separate living space for family or friends
• Becomes a rental property depending on local laws
• Increases the value of the property for resale if ADU is lawful

Cons of Building and Owning an ADU

• The ADU must meet local zoning ordinances, qualifications, and building codes to be considered legal and lawful
• Building costs can be expensive
• May have tax consequences depending on your state
• Maintenance costs
• Can complicate resale or refinance if unlawful

Related Link: My Site Plan Frequently Asked Questions

Does an ADU Increase Your Property Value?

Yes. Depending on your location and property, an ADU can increase your property value by 30%-50%. This assumes the ADU is legal and coded according to local laws. For many property owners, an ADU is worth the investment.

What’s the Average Cost of Building an ADU?

The cost of your ADU build will depend on your budget, type of ADU, and location of the build. So building costs can vary dramatically. But the US average cost of building an ADU is about $181K. You can expect to pay about $162-$682/sq ft, and the average per square foot is about $305/sq ft.

Building a detached new construction above the garage is generally the most expensive ADU, and a garage conversion is your least costly ADU option. Here are the cost averages based on ADU type:

• Garage Conversion: $142K
• Attached ADU: $154K
• Detached New Construction: $180K
• Basement ADU: $185K
• Detached New Construction Above a Garage: $217K

Construction Options for Building an ADU

If you’re considering building an ADU on your property, you have several options. You can build an ADU using one of the following methods:

• Do-It-Yourself: If you understand the ins and outs of building construction, you can take a crack at building the ADU on your own. But we don’t recommend this option because there are many technicalities you need to ensure are done properly to be considered legal.
• Prefab ADUs: These pre-manufactured detached units are relatively easy to install on your property, but you’ll need to ensure they meet all qualifications for the local area.
• Design and Build Contractors: These contractors specialize in ADU construction and know the ins and outs of local qualifications and laws. We recommend using this option.

ADUs are a Great Option for Increasing the Value of Your Property

Building and owning an ADU can significantly increase the value and desirability of your property. An ADU also allows you to earn passive income if you’re allowed to rent your ADU in your area. But be wary of the costs and qualifications that can complicate owning an ADU.

Related Link: What Are the Steps to Renovating a House?

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