Accessory dwelling units or “ADU” are on the rise, as the majority of American cities experience record high housing prices and not enough supply to meet demand. These smaller units allow homeowners a ton of flexibility – they can rent out the unit to make passive income, or use it for a growing or aging family.
They are also popular among people who want to downsize—especially households with 1-2 people who don’t need the typical 3–4-bedroom house, and choose to live in the smaller space.
Local zoning restrictions and building codes will affect what you can and can’t build on your property, but with so many different types of ADU builds to choose from, most homeowners can find the right one to suit their needs.
What Qualifies as an ADU?
One of the main things that differentiate ADUs from regular apartments is that they must be on the same residential lot as the primary home. They need their own separate entrance, and tend to be smaller (between 600-1500 sqft).
There’s no one size-fits-all, however, and building size is mainly restricted by local code, the size of the lot, and the homeowner’s budget.
ADUs can be attached or detached from the main house, but if it’s detached, it must have a proper foundation and not be on wheels. That means RV’s and any tiny homes that are on wheels would not classify as an ADU, even if they are parked on a foundation.
Accessory dwelling units must also have all of the essential living spaces that a regular home does. A bedroom and living area must be present, though it can be in the form of an open plan/ bachelor apartment type style to save on space.
They also must have a fully functioning kitchen with a sink, running water, countertop, refrigerator, and working stove. A hot plate in a kitchenette would not be considered a legal kitchen. Smaller apartment-sized appliances can help save on space, though they are usually more expensive.
Lastly, a full bathroom including a toilet, sink, and shower is also a requirement. Again, certain workarounds like a compost toilet, space-saving vanities, and smaller shower sizes are allowed, as long as the basic requirements are met.
Detached New Construction
New builds are popular with homeowners who have a good amount of space on their lot, and no other structure already in place. Maybe there’s a garage or a shed, but the yard has enough available land to build something from scratch.
There are many advantages to this type of ADU, and the main one is that you can build your dream unit. Local ordinances will play a factor in the size, but building a unit this way can often be the simplest and cheapest option in the long run.
This also give the homeowner more options on where it’s located. For those with deep lots, the ADU can be built far enough away from the house so that it offers more privacy and can integrate other features like a patio or deck space, and even a private garden or pool area.
These features would make the unit much more desirable to potential renters, and would likely bring in more cash flow for not much more money.
Even if space is limited, a new build can utilize good design and build according to the lot. A tall, thin structure can take advantage of building upwards to create more square footage, whereas a long, bungalow type unit can be built to lay beneath hanging trees, or other obstructions.
A tiny home is usually a detached new build, though they don’t always classify as an ADU. While many tiny homes are stationed on someone’s property, they are often built on a trailer with wheels so that they can be moved from one location to another.
Just like an RV, any tiny home on wheels will not classify as an ADU, and will fall under different zoning laws. It doesn’t mean that they won’t be allowed on your property, it just means you should know the difference when checking out your local allowances.
It may not matter in the end whether you have an actual ADU or a tiny home on wheels, as it can be a matter of semantics. Tiny homes tend to have a particular kind of trendy design that’s very popular with DIY builders who use scrap materials and found items to create their living space for cheap.
Tiny homes can be made from shipping containers, old converted school buses, or they can be bought pre-fabricated. The skies’ the limit in terms of ADU design, as long as there’s no wheels.
Another popular idea for an ADU is to convert a garage into extra living space. These tend to be detached structures that are far enough away from the home that an ADU can have some outdoor space all to its own.
There are a few things to consider when adapting this kind of exterior space, as not all garages will be cost-effective or salvageable as living space.
If the structure is in bad shape, you might be better off tearing down the whole thing and starting from scratch. Check for any problems with the foundation, as well as the roof and eaves system, as these are some of the most expensive aspects of the build.
If the structure is leaning, or more than half of the joists and or other framing has to be replaced, this too can warrant building from scratch. If you want to build a second story, there needs to be proper footings.
Since garages weren’t meant to be living space, there’s often a lot more work required than homeowners think. They need to be insulated and vapor barriered properly, from the floor up to the roof, with some kind of heating and cooling system.
If walls are exposed, and the exterior is in good shape, then a conversion may be successful, especially if there are aspects to the old building that are historically and aesthetically appealing.
Garage Granny Flat
Another option for a garage conversion is to leave the lower level as car and storage space, and add living space above. Some local codes won’t allow for a new build to change the original footings* of the old structure, so that’s something to check before you even start the design process.
This kind of build is a combination of a conversion and new build, as the upper unit can be built and designed from scratch, offering the homeowner a way to create a brand-new living space. As long as a second story is legal and feasible, this can be a great way to add an ADU without losing any of your primary square footage.
For both kinds of garage ADUs, getting proper electrical and plumbing to the spot must be thought out. With a new build, lines are usually easier to run to the spot, but it’s not always that simple with an existing structure. Compost toilets can take the pressure off of getting sewer lines out to the unit.
The other consideration is where to put the door. In a basic garage conversion, the main access door becomes the front door. For an upstairs unit, stairs and a new door would have to be implemented into the design.
If the staircase is on the side, it can be built along with an upper deck or patio area, which can also give the prospective tenant or family member more outdoor space. This kind of unit can also change where the door is, allowing for more privacy than a door that faces the primary home.
Additions are also known as “bump-outs” and are a kind of ADU that is attached to the primary residence. Additions can be built onto the side of the house, or added on top to create another level. If the home has a large lot on the back side of the home, an addition often makes the most sense to build there.
Even though they might utilize some of the interior space that already exists, additions are always new builds. If your home’s roof is in bad shape and needs replacing anyway, integrating extra attic space or another level in congruence with the new roof may be a smart way of using renovation budget.
There’s a lot of flexibility to get creative, but a separate entrance must be created along with enough square feet to meet the requirements of a legal ADU.
These types of ADUs can be the most economical because they are so close to the home. They can easily access the electrical and plumbing systems, and can integrate the exterior wall of the primary home to reduce the amount of building materials needed.
Internal or Primary ADU
These kinds of ADUs take advantage of the square footage somewhere inside the primary residence. A second story may be sectioned off and turned into another apartment, or an attic or basement could be converted into a rental unit—or all three!
When internal ADUs are made into two units, the home has been turned into a duplex—three units is a triplex, and so-on. This can also be a great way for homeowners to downsize if they feel like they don’t need as much space as what they have, or they want to move somewhere else and rent out two units for even more passive income.
There are separate rules for duplexes, however, so once again, check local building codes and zoning restrictions to see if you are allowed to change the layout of the home and turn it into a multi-family dwelling.
If you are, then you need to make sure that separate entrances are possible, and that certain elements are up to code. This can include adding more drywall to ceilings according to fire regulations, adding egress windows to basement apartments, and installing thermostats in each unit along with separate water and gas meters.
New, detached builds will also have to consider heating and cooling systems, so it’s not necessarily an extra expense, but some informal ADUs out there don’t address these particular issues, and are therefore illegal units.
Modular vs Stick-Build
Stick build construction refers to building on-site, whereas modular or pre-fabricated homes are built off-site. Each has their pros and cons, and choosing between them depends on a few different factors like budget, site allowance, and homeowner aptitude.
Any of these ADUs already mentioned can be designed and primarily built by a DIY-er at heart, but that doesn’t mean they should be. If you have the time and skill, or are willing to get your hands dirty and learn as you go, then you could save a lot of money on labor costs on a stick-build.
Hiring a general contractor is expensive, but they can bring peace of mind and savings, as they keep the trades organized, and the project moving forward. Any mistakes made by the homeowner could be costly and end up wasting time.
This brings in the other option of going with a modular or pre-fab ADU. For anyone who wants to leave the entire project in someone else’s hands, this could be the best decision. Modular homes are built off-site, meaning all noise, waste material, and general disruption are kept away until its time to bring the ADU home.
Costs are fairly similar to a new build, though this will also depend on what kind you are looking at. A basic 600 sqft pre-fab ADU will cost around $250/sqft for a two bedroom, one bath home, or about $160,000 altogether.
While you may be able to stick-build something similar in size for cheaper, the modular home would be finished in approximately eight weeks – and we all know time is money.
Restrictions to ADUs
The main restrictions to check out first are the legal ones. Call, or set up an appointment with your local government agency that oversees building codes and permits. While most major cities are making it easier to get approval on plans, there can be hidden costs that you weren’t considering when you first made a budget.
Your particular neighborhood or HOA may also have restraints on ADUs, but sometimes they don’t have legal precedence. Before ordering any materials or fantasizing about your dream space, get all of your legal ducks in a row.
You may need an architect or engineer before you can do anything, or you might not even need a permit in some places like California as long as the ADU is within certain size constraints. Sometimes limitations can be a blessing in disguise, as they can narrow down options to help you streamline your plans.
Size and budget will be the other biggest set of boundaries to work with, as the two go hand in hand. The larger the unit, the more it will cost, but the more money it may make in the long run. The return on investment for ADUs is usually excellent, so expect to earn back what you put in within five years if you are planning to use it for passive income.
Even if you don’t rent it out and it becomes an in-law suite or extra space for a growing family, a well-built ADU can add a ton of resale value, especially as more prospective homeowners are looking for these kinds of features.
While there are many different types of ADU builds, there’s often one that will make the most sense for you and your property. Feel free to dream big, even if the living space is small.