24 Step ADU Planning Checklist to Building An Accessory Dwelling Unit

As housing prices rise and space becomes more limited, homeowners are exploring new ways to enhance their property’s value and functionality.

Building an Accessory Dwelling Unit (ADU) is an increasingly popular solution that can provide rental income, offer a comfortable living space for family members, or simply increase your home’s versatility.

The ADU planning and build process has numerous steps to navigate and important decisions to consider.

This comprehensive guide serves as a roadmap, guiding you through each phase of the ADU process—from initial planning to final inspection and beyond.

Whether you’re a first-time builder or an experienced property owner, this ADU planning checklist will equip you with the knowledge and tools needed to turn your ADU vision into reality.

Disclosure: This post may contain affiliate links, meaning I can earn commissions. If you decide to purchase through my links, it is at no cost to you.

Who The ADU Planning Checklist is For?

This checklist is designed for a wide range of individuals in the ADU planning stage, including:

Step 1: Assess Your Current and Long-Term Goals

Before diving into the planning and construction of an ADU, it’s crucial to consider your goals—both immediate and long-term.

Understanding your motivations will guide your decisions on design, location, and use, ensuring that your ADU meets your needs now and in the future. It will also help you decide on the type of ADU you need.

If your ADU has flexibility it could be transitioned to a different use in the future.

20 Questions to Assess Your Short-term ADU Goals

• What is your immediate goal for the ADU?
• What does your ADU need to have to meet the short-term function?
• What are my storage needs for the ADU?
• How important is energy efficiency in my ADU?
• Do I plan to incorporate smart home technology?
• What level of privacy do I need between the ADU and the main house?
• What are my landscaping and outdoor space goals for the ADU?
• Will the ADU be ready for immediate use, or will I need to make further adjustments?
• What is the expected timeline for completing the ADU, and how does it align with my needs?
• Do I need the ADU to be fully furnished or just functional for now?
• How will I ensure that the ADU meets local building codes and regulations in the short term?
• What immediate maintenance or upkeep will be required after the ADU is completed?
• Do I need to set up utility connections and services right away?
• Will the ADU require any immediate modifications for comfort, such as climate control or insulation?
• Should I prioritize certain features, like a functional kitchen or bathroom, for short-term use?
• Am I planning to use the ADU for rental income immediately, and if so, is it move-in ready?
• What security measures do I need to implement in the short term for the ADU?
• Do I need to establish a budget for any immediate, unforeseen expenses related to the ADU?
• How will I address any immediate accessibility needs for potential occupants of the ADU?
• Do I need to create a short-term rental agreement or house rules if renting the ADU out soon?

20 Questions to Assess Your Long-term ADU Goals

• Do I need the ADU to be ADA-compliant?
• Do I want the ADU to accommodate multi-generational living?
• Am I planning for long-term rental income from the ADU?
• How will I handle potential changes in zoning laws or regulations?
• Do I need the ADU to be adaptable for different future uses?
• Will I be selling the property in the future, and how will the ADU impact its marketability?
• Do I want to design the ADU to appeal to potential buyers?
• Will I need to accommodate future technological upgrades in the ADU?
• Is there a need to plan for potential expansions or modifications to the ADU?
• Will I use the ADU for personal use, such as a home office, in the future?
• How will the ADU affect my overall property maintenance routines?
• Will the ADU be a space I might use for retirement living?
• Do I need to consider the environmental impact of the ADU on my property?
• Am I planning for the ADU to provide housing for future family members?
• What is my plan for future upgrades or renovations to the ADU as technology and materials improve?
• How will I manage the long-term relationship with tenants or occupants if the ADU is rented out?
• Do I need to consider the future adaptability of the ADU for different life stages, such as accommodating children or aging in place?
• Am I planning to pass down the property, including the ADU, to future generations?
• How will the ADU affect my long-term financial planning, including retirement and estate planning?
• What is my strategy for maintaining or improving the ADU’s condition over the years to retain its value?

Step 2: Understand Local ADU Regulations

Before you begin, research and understand your local ADU regulations. These rules vary widely by location and can significantly impact your project’s scope.

Maximum ADU Size

Determine the maximum allowable size for an ADU in your area. This will help you plan the layout and design efficiently.

Some areas allow for up to 800 while others could allow for up to 1,200. Typically the ADU can only be a certain percentage of the primary home square footage.

Owner Occupancy Requirements

Check if your city requires the property owner to live in either the main house or the ADU.

This is a common regulation that can affect rental options. Some areas have removed this requirement.

Setbacks and Zoning

Review setback requirements, which dictate how far the ADU must be from property lines, and ensure your property is zoned for an ADU.

Parking Requirements

Some cities require additional parking spaces for ADUs. Verify if this applies and how it might affect your design. Some areas have waived this requirement.

Number of ADUs Allowed Per Property

Confirm how many ADUs you can build on your property, especially if you’re considering adding more than one.

Subdivision and Separate Sale Options

Investigate whether your ADU can be subdivided and sold separately from the main property, which could offer future financial flexibility.

Permit Process Duration and Costs

Understand the timeline and costs associated with obtaining permits. This includes both the initial application and any potential revisions.

Development and Impact Fees

Be aware of any additional fees imposed by the city, such as development or impact fees, which can add to your overall budget.

An impact fee is the cost to provide additional utility usage without extra infrastructure.

This fee could be used to offset some future upgrades. Many areas have modified the impact fees as they can add up.

Step 3: Estimate Your ADU Costs

Accurately estimating costs is essential for budgeting and financing your ADU project. Costs can vary depending on location, design choices, and unforeseen challenges.

Local Construction Costs Per Square Foot

Research the average construction costs per square foot in your area to estimate the basic building expenses.

Utility Connections and Trenching

Factor in the costs of connecting utilities like water, sewer, and electricity.

Trenching for these connections can also add to your expenses.

Solar Panels (If Required)

Some areas mandate the inclusion of solar panels for new constructions.

Calculate the potential costs if this applies to your project.

Electrical Panel Upgrades

If your current electrical panel isn’t sufficient to handle the additional load, you may need to upgrade it, which could cost a few thousand dollars.

HVAC Requirements & Upgrades

You will likely need a separate HVAC system for the ADU. If you are doing an ADU garage conversion, you may need to upgrade your current system to accommodate two living spaces independently.

Commonly Overlooked Expenses when Planning an ADU

• Blinds and Window Treatments
• Closet Rods and Shelving
• Landscaping and Outdoor Lighting
• Interior and Exterior Door Hardware (e.g., doorknobs, locks)
• Utility Connection Fees (e.g., water, gas, electricity)
• Mailboxes and House Numbers
• Garage Door Openers
• Driveway and Walkway Paving
• Paint and Touch-Up Supplies
• Bathroom Accessories (e.g., towel bars, toilet paper holders)
• Mirrors for Bathrooms and Bedrooms
• Security Systems or Cameras
• Trash and Recycling Bins
• Extra Insulation for Soundproofing
• HVAC System Maintenance and Filters
• Fencing or Privacy Screens
• Rain Gutters and Downspouts
• Storage Solutions (e.g., cabinets, pantries)
• Lighting Fixtures (including bulbs)
• Fire Extinguishers and Smoke Detectors
• Energy-Efficient Upgrades (e.g., solar panels, smart thermostats)
• Furniture and Décor for Smaller Spaces
• Window Screens
• Driveway or Sidewalk Repair (if damaged during construction)
• Temporary Housing or Storage During Construction

Step 4: Secure Financing

After estimating your costs, the next step is to secure financing.

There are several options available, each with its benefits depending on your financial situation and goals.

Cash

Paying in cash allows you to avoid interest payments and keeps the project straightforward, though it requires significant liquid assets.

HELOC (Home Equity Line of Credit)

A HELOC lets you borrow against the equity in your home, typically with a lower interest rate. It offers flexibility, as you can borrow only what you need and pay interest only on what you use.

HeLoan (Home Equity Loan)

This option allows you to borrow up to 90% of the equity in your current home, providing a lump sum that can be used for your ADU project.

It’s a good choice if you need a larger amount upfront.

Cash-Out Refinance

Refinancing your existing mortgage allows you to take out cash based on your home’s equity.

This option can provide a significant amount of capital, though it extends your mortgage term and may come with higher monthly payments.

Construction or Renovation Loan

These specialized loans are designed for building or renovating properties.

They typically offer structured disbursements as the project progresses, ensuring funds are available when needed.

Home Equity Investment

With this option, you can assign a portion of the future equity in your property in exchange for a set amount of money to fund your ADU project.

It doesn’t involve monthly payments but shares the future value appreciation of your home with the investor.

Step 5: Define Your Project Scope

Clearly defining the scope of your ADU project is crucial for smooth execution and staying within budget. This step involves making key decisions about the type, location, and design of your ADU.

ADU Location

Decide where on your property the ADU will be built. Common options include:

• Garage conversions
• Building above the garage
• Constructing a detached unit in the backyard

ADU Type

Choose between a prefab ADU or a traditional stick-built ADU.

Prefab units offer quicker construction and potential cost savings, while stick-built units provide more customization options.

More on this in the next section.

Parking Requirements

Ensure your project meets local parking requirements, which may involve adding parking spaces or modifying existing ones to accommodate the ADU.

Setbacks

Consider setback requirements, which dictate how far your ADU must be from property lines.

This will influence where your ADU can be placed on your property.

Step 6: Plan Your Project with Experts

Before construction begins, it’s important to plan your project thoroughly.

This stage involves refining your ideas and deciding on the best approach for your specific needs.

Consult with Professionals

Engage with architects, designers, and contractors early on to help visualize your ADU, ensuring it meets both your functional needs and local regulations.

Decide on Project Management

Determine whether you will act as your general contractor or hire a professional contractor.

Self-contracting can save money but requires significant time, knowledge, and oversight.

Hiring a contractor provides expertise and project management but may come at a higher cost.

City Planners

Consult with local planning departments to clarify regulations and address any potential issues before they arise.

This can help avoid delays during the permitting process.

Consult with Insurance Provider

When planning an ADU, it’s crucial to consult with your insurance provider to understand how the new unit will affect your coverage and costs.

Ask if they have any criteria that could lower your premium, such as installing fire-resistant materials or adding security systems during the build.

For example, using non-combustible roofing or adding a monitored alarm system might reduce your insurance costs.

Step 7: Hire a Designer or Prefab Company

Selecting the right team is critical to the success of your ADU project.

Experience with ADUs

Ensure your designer or prefab company has experience with ADUs and understands local regulations.

Small space planning is specialized and not everyone has the vision to design or customize a space to maximize functionality.

Cost Efficiency

Compare quotes and look for a team that can deliver quality within your budget. Be sure to remember the often-forgotten expenses like blinds, décor, etc.

Design and Construction Expertise

Choose a firm that offers both design and construction services to streamline the process and reduce the risk of miscommunication.

Step 8: Navigate the Design Process

The design phase is where your vision starts to take shape. Working closely with your designer will ensure the final plans meet your needs and comply with local codes.

You may have the option to select pre-approved plans which could offer cost savings as well as time savings.

If you are doing a custom build, here is how to navigate the design process.

Site Measure

Assess your property and existing structures to understand the space available for your ADU. 

Programming Meeting

Discuss your vision, budget, and functional needs with your designer.

Schematic Design

Develop preliminary layouts and floor plans that align with your goals. 

Design Development

Finalize structural details, energy efficiency measures, and material selections. 

Construction Documents

Prepare detailed plans that will be used for permit applications and by contractors during construction. 

String Design

Layout your walls in the backyard with string and wooden stakes to envision the size of the structure. 

Foundation Design

Choose between a slab, crawl space, or basement foundation based on your site conditions and design.

The foundation should be selected during the design process so your permit is approved for the right type.

Step 9: Hire a General Contractor

With permits in hand, it’s time to hire a contractor to bring your ADU to life. If you haven’t already.

Choosing the right contractor is crucial for staying on budget and on schedule. 

Verifying Contractor Licenses and Insurance for your ADU Build

Before starting your ADU build, it’s essential to verify that your contractor holds the proper licenses and insurance.

This protects you from potential liabilities and ensures the work meets local regulations and safety standards. 

Compare Estimates

Get quotes from multiple contractors and compare them not just on price but also on the scope of work and timeline.

It may be necessary to do some redesign if your plan is more costly than your budget. 

Communication and Project Management

Choose a contractor with a strong track record of clear communication and effective project management.  

Work Site Protocols

Ensure the contractor has a plan for maintaining a safe, organized worksite and minimizing disruption to your daily life.

Step 10: Submit for ADU Building Permits

Once your design is finalized, submit it to the city for approval. The permitting process can be time-consuming, so be patient and prepared for potential revisions. 

Permit Submission

Ensure all necessary documents are included to avoid delays. Double-check the packet of documents you are submitting to ensure everything is included. 

City Review

Be ready to respond to city feedback and make required adjustments to your plans. 

Approval

Once approved, you’ll receive the permits needed to begin construction.

Step 11: Site Preparation for your ADU

Preparing your site is a critical first step in the construction process.

Surveying

Conduct a land survey to ensure accurate placement of your ADU.

Grading

Level the ground to provide a stable foundation.

Excavation

Excavate the site to prepare for the foundation.

Site Utilities

Install necessary utilities such as water, sewer, and electrical connections.

Step 12: ADU Foundation Construction

A strong foundation is essential for the longevity of your ADU.

Foundation Installation

The foundation will be installed based on your site conditions and design.

Moisture Management

Incorporate drainage and waterproofing solutions to protect your ADU from moisture damage.

Foundation Inspection

A foundation inspection is crucial to ensure the stability and safety of your ADU. It helps identify any issues early on, preventing costly repairs and structural problems down the road.

Step 13: Framing Your ADU

The framing stage is when your ADU starts to take shape.

Material Choice

Most ADUs are framed with wood, but steel framing is also an option for added durability. Your zoning and permit should specify this material selection.

Structural Integrity

Ensure that the framing meets all structural requirements and is inspected by a certified professional.

Framing Inspection

A framing inspection ensures that the structure of your ADU is sound and meets building codes.

It’s a key step in confirming that the walls, floors, and roof are properly constructed before moving forward with the build.

Step 14: Exterior Sheathing

Exterior sheathing protects your ADU from the elements.

Sheathing Material

Choose durable materials that offer both protection and insulation.

House Wrap

Install a house wrap to create a moisture barrier and improve energy efficiency.

Step 15: Rough-Ins

The rough-in phase involves installing the internal systems that will power and service your ADU.

Mechanical Systems

Install heating, ventilation, and air conditioning (HVAC) systems.

Electrical Systems

Run electrical wiring and install the electrical panel.

Plumbing Systems

Set up water supply and drainage systems.

MEP Inspections

MEP inspections (Mechanical, Electrical, and Plumbing) are essential to verify that all systems in your ADU are installed correctly and comply with safety standards.

These inspections help prevent future issues and ensure everything operates efficiently and safely.

Step 16: Drywall Installation

Drywall installation defines the interior spaces of your ADU.

Drywall Type

Choose the appropriate type of drywall for different areas, such as moisture-resistant drywall for bathrooms.

Drywall Installation and Finishing

Hang and finish the drywall, ensuring smooth, paint-ready surfaces.

Step 17: Finishes and Exterior Work

With the main construction complete, it’s time to focus on the finishing touches that will make your ADU both functional and aesthetically pleasing.

Interior Finishes

Install interior elements such as cabinetry, countertops, flooring, and trim. Choose materials that match your design vision and budget.

This is also the stage to paint the walls and install fixtures like lighting, plumbing, and hardware.

Appliances and Fixtures

Select and install appliances such as the stove, refrigerator, and washer/dryer. Ensure all fixtures, like faucets and lighting, are installed correctly and function properly.

Exterior Finishes

Complete any remaining exterior work, including siding, roofing, and paint. Install gutters, downspouts, and any additional outdoor features such as decks, patios, or landscaping that enhance the appearance and usability of your ADU.

Final Touches

Add the finishing details, such as window treatments, built-ins, and any custom features that make the space comfortable and ready for occupancy.

Step 18: Final Inspection and Occupancy

Before you can move in or rent out your ADU, you’ll need to pass a final inspection to ensure that everything is up to code and the unit is safe and habitable.

Schedule the Inspection

Contact your local building department to schedule the final inspection. Make sure all work is completed and the site is clean and accessible.

Prepare for Inspection

Double-check that all systems (electrical, plumbing, HVAC) are functioning properly and that all safety features, such as smoke detectors and egress windows, are in place.

Certificate of Occupancy

Once your ADU passes the inspection, you’ll receive a Certificate of Occupancy. This document certifies that your ADU meets all building codes and is legally approved for living or renting.

Step 19: Set Rental Price and Find a Tenant

With your ADU ready for occupancy, the next step is to determine a competitive rental price and find a tenant.

Determine Rental Price

Use tools like Rentometer, Zillow, and Craigslist to research local rental rates. Consider factors like location, size, and the unique features of your ADU to set a fair and attractive price.

Highlight Features

When listing your ADU, emphasize its modern amenities, energy efficiency, and any special features that set it apart from other rentals.

High-quality photos and detailed descriptions will help attract potential tenants.

Market Your ADU

Advertise your ADU on rental platforms, social media, and local classifieds. You might also consider working with a property management company if you prefer a hands-off approach to renting.

Step 20: ADU Maintenance and Upkeep

Once your ADU is built and occupied, maintaining it is crucial to ensuring its longevity and continued value.

Routine Maintenance

Schedule regular maintenance checks for pest control, HVAC systems, plumbing, and electrical systems to prevent any issues from arising.

Landscaping and Exterior Care

Keep the exterior well-maintained by regularly cleaning gutters, inspecting the roof, and maintaining any landscaping around the ADU.

Tenant Communication

Establish clear communication channels with tenants regarding maintenance requests and repairs.

Promptly addressing these will help maintain a good landlord-tenant relationship and protect your investment.

Step 21: ADU Insurance and Liability Considerations

Protecting your ADU and managing liability risks is essential, especially if you’re renting it out.

Update Home Insurance

Contact your insurance provider to update your policy to include the ADU. Ensure that both the structure and contents are covered in case of damage or loss.

Landlord Insurance

If you plan to rent out your ADU, consider purchasing landlord insurance to cover rental-related risks, such as property damage or loss of rental income due to covered perils.

Liability Coverage

Increase your liability coverage to protect yourself against potential lawsuits arising from tenant injuries or other incidents on the property.

Step 22: ADU Sustainability and Energy Efficiency

Incorporating sustainable practices can reduce the environmental impact of your ADU and lower utility costs.

Energy-Efficient Appliances

Equip your ADU with energy-efficient appliances and fixtures to minimize energy consumption.

Solar Panels and Green Energy

If not already required, consider installing solar panels or using other renewable energy sources to power your ADU.

Water Conservation

Implement water-saving features like low-flow faucets, dual-flush toilets, and drought-resistant landscaping to reduce water usage.

Step 23: Legal and Tax Implications For an ADU

Understanding the legal and tax implications of owning and renting an ADU is crucial for long-term financial planning.

Rental Income Taxes

Report rental income accurately on your tax returns. You may be able to deduct certain expenses, such as maintenance, property management fees, and mortgage interest, related to the ADU.

Property Taxes

Be aware that adding an ADU may increase your property taxes, as it could be considered an improvement that raises the overall property value.

Local Laws and Regulations

Stay informed about local laws and regulations that may affect ADU ownership, such as rent control ordinances or changes in zoning laws.

Step 24: Future ADU Expansion or Modifications

Plan for potential future modifications or expansions to your ADU based on changing needs or new opportunities.

Expansion Possibilities

If space and regulations allow, consider adding more living space or amenities to your ADU in the future.

Conversion Options

Think about how the ADU might be repurposed or converted for different uses as your

needs evolve. For example, it could be used as an office, a guest house, or even a home for aging relatives.

Resale Value

Keep in mind that any modifications or expansions could increase the resale value of your property.

However, ensure that all changes comply with local building codes and regulations.

By following these steps, you can smoothly navigate the process of planning, building, and maintaining an ADU. Good luck with your project!

Final Thoughts on ADU Planning

This ADU planning checklist has guided you through each crucial step, helping you navigate the complexities and make your Accessory Dwelling Unit vision a reality.

Remember, an ADU isn’t just a project—it’s an investment in your future.

With the right approach, your ADU will become a versatile and valuable asset, ready to meet your needs today and tomorrow.

Frequently Asked Questions