The surge in Accessory Dwelling Units (ADUs) across America is a trend that cannot be overlooked.

These small structures offer solutions to various rental housing challenges while providing financial benefits for homeowners.

I first learned about these structures at about 8 years old when we built a detached unit for my grandpa in the backyard. He lived in this 1 bedroom granny flat until he passed away. My older siblings had a chance to live in “the apartment,” as we called it.

I am pretty sure it was an unpermitted ADU. 😝

I remember it being built, and my parents had to save money on certain things, so my grandpa got a matching set of rose-pink bathroom fixtures. I thought a pink toilet and tub were just the coolest thing!

Rose pink toilet

I visited with my grandpa daily while he sat on his patio with a flyswatter waiting for the next bug to come into his reach. He also loved to scare me right when it was really quiet, and of course, I jumped, and he laughed.

In reality, I had no idea of the blessing an ADU project could have for a homeowner. I was 8, and I didn’t care!

Back to today, think of being able to offset your mortgage with the potential rental income (maybe thousands!).

Get ready for an eye-opening exploration into the world of ADUs! 🏠

Discover the essentials of Accessory Dwelling Units and how ADUs are quickly becoming a popular Go-To alternative housing option. Let’s get started! 💡

Key Takeaways
  • ADUs are increasingly popular in the U.S., offering solutions to rental challenges and financial benefits for homeowners.
  • ADUs provide separate, affordable living spaces on the same lot as a primary house.
  • They serve as rental units, multigenerational living spaces, home offices, and more.
  • Popular for being resource-efficient, cost-effective, and environmentally friendly.
  • States are promoting ADU construction through laws and supportive programs.
  • ADUs offer versatility in design and can include accessibility features.
  • Their smaller size leads to lower resource use, promoting sustainability in construction and maintenance.

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.

What is an ADU, and What is ADU Housing?

ADU stands for accessory dwelling unit. An ADU is an accessory living space on the same lot as a primary property for affordable housing choices.

It’s typically smaller, separate from the primary house, and is a great choice for those seeking a rental space or just more space.

ADU homes are increasingly becoming popular for those seeking additional affordable housing options in the United States. Find information on the ADU house requirements in your area on the Accessory Dwellings website.

Fannie Mae tells us the ADU must:

Be Subordinate in Size

  • ADU homes must be smaller in size compared to the primary house. You can’t just build a 2,000-square-foot ADU behind a 1,000-square-foot house!

Have Separate Features from the Primary Home

  • Means of ingress/egress

  • Kitchen

  • Sleeping area

  • Bathing area

  • Bathroom facilities

Meet Kitchen Requirements

  • Cabinets

  • A countertop

  • A sink with running water

  • A stove or stove hookup (Note: hotplates, microwaves, or toaster ovens are not acceptable)

Requirements and Regulations for the Accessory Dwelling Units

ADU requirements and regulations across the US vary by state. For example, some states may require the property to be owner-occupied, while others do not.

Understanding local laws, ADU ordinances, and zoning regulations is important before building ADU units.

You can not just stick a stand-alone shed in the backyard and call it an ADU (not legally, at least).

Let’s look at some common requirements and regulations for these housing units.

Zoning Requirements 🛎️

  • Residential Zoning: Most ADUs must be located in residential zones. So you can’t stick an ADU behind your commercial building.

  • Lot Size: A minimum lot size may be required to build an ADU.

ADU Sizes and Dimensions 📏

  • Minimum and Maximum Size: You may be asking how big is an ADU. It depends! While minimum sizes will vary, states like California have set a 150 minimum square footage ADU requirement. The maximum size will vary and is related to the local law and the size of the primary dwelling.

  • Height Restrictions: There may be limits on how tall an ADU can be, especially for detached units.

Occupancy 👨‍👩‍👦

  • Owner-Occupancy: Some jurisdictions require that the owner live in either the primary dwelling or the ADU. Some states are starting to update this requirement.

  • Number of Occupants: There may be a limit on the number of people living in the ADU.

Parking 🚗

  • Parking Spaces: Additional parking spaces may be required when adding an ADU. This requirement is also being updated in many cities.

  • Setback Requirements: Parking must often be far from property lines.

Utilities 💡

  • Separate Utilities: Some jurisdictions require separate utility connections for the ADU.

  • Sewer and Water: The ADU must be connected to sewer and water services.

Design and Aesthetics 🏠

  • Architectural Consistency: The ADU often must be similar in appearance to the primary dwelling.

  • Entrance Location: The entrance to the ADU may need to be on a certain side of the building.

Permits and Fees 💰

  • Building Permits: You’ll need various permits to build, which may include planning, building, and electrical permits.

  • Impact Fees: Some jurisdictions charge impact fees to offset the additional public services required. These are also being changed to make it easier for homeowners.

Rental Restrictions 🚫

  • Short-Term Rentals: Some jurisdictions do not allow ADUs for short-term rentals. You can’t just create an ADU for AirB-n-B purposes – but you might double-check to find out!

  • Lease Terms: There may be minimum or maximum lease terms for renting out the ADU.

Safety Requirements 🧯

  • Fire Safety: Fire-resistant materials and smoke alarms are generally required.

  • Accessibility: Some jurisdictions require ADUs to be accessible to people with disabilities.

Does an ADU have to have a kitchen?

Usually. Some cities have ADU kitchen requirements. They could mandate that an ADU must have a kitchen with cabinets, a countertop, a functioning sink, and an eating area.

Other places may have more lenient regulations or might not require a kitchen at all.

If you will have the ADU as a rental, you will need a space for your tenant to cook so an efficiency kitchen would be ideal.

The California ADU kitchen requirements are:

  • A cooking facility with appliances.
  • A food preparation counter and storage cabinets that are of reasonable size to the size of the junior accessory dwelling unit.

ADU Uses and Benefits

ADU other names

There are many uses and benefits to having an ADU:

  • Rental unit – increasing the affordable housing options

  • Multigenerational housing – an adult child or disabled relative

  • Aging in place

  • Home office or additional living area

  • Guest house or hosting space

  • Option for downsizing – move into the ADU and rent out the main house

  • Man Cave or She Shed

  • Yoga Studio or Meditation Space

  • Study Space

Types of ADUs

There are two main types of ADUs:

  • Attached – The housing unit shares at least one wall with a single-family home.

  • Detached – This is an additional structure on a property that shares no walls with the main house. There are two units on the property.

ADUs can also be prefabricated, also known as a prefab ADU or a stick-built ADU.

Attached ADU vs. Detached ADU

Attached ADUs (JADUs)

Attached ADU
  • The attached ADUs are called Junior ADUs (JADUs). These are connected to the main property, with a separate entrance.
  • Think basement apartments, garage conversions, or attic conversions.

Detached ADUs (DADUs)

Detached ADU
  • A DADU is located separate from the primary home as a stand-alone unit.
  • Think Accessory apartments, Granny Flats, Boxabl, a Shed conversion, or a Shipping Container home could be examples.

Prefab ADU vs. Site-Built ADU

Prefab ADU

Prefab adu
  • A prefab ADU is a structure that can be delivered and dropped off in your backyard, ready to be lived in a few hours or days.
  • In many cases, the structure is entirely built off-site and delivered, or a kit is assembled at your property.

Site-Built ADU

Site built adu
  • A stick-built or Site-built adu is just that, built from the ground up at the site.
  • This option is constructed in a matter of months, depending on the weather delays or supply issues.

Here is a great video explaining what an Accessory Dwelling Unit is.

Can an RV be used as an ADU?

Not formally, but some use an RV as an extra living space for guests or adult children. I have also seen RV’s listed as AirBnB rental online though that may be considered an informal use.

What is the difference between an ADU and a Guest House?

These can easily be interchangeable to mean the same thing. There is no difference in the purpose they serve, but for financing purposes, you may want to use the word ADU.

Exploring the Prefabricated Options

Ready-to-install ADUs are all the rage now. They can help you save on resources, cash, and the environment. Plus, they come in cool designs.

Top Manufacturers of Prefab Models

When it comes to prefab homes, these companies are killing it:

These Accessory Dwelling Units are fast, affordable, and eco-friendly. Customize your prefab units to your heart’s content for a speedy, budget-friendly, and eco-conscious solution.

Here is a SnapADU plan – I would live there!

The Soaring Popularity of ADUs

We know ADUs are not a new concept. In fact, the ADU’s history goes back to the early 20th century when the structures served as spaces for extended family or domestic help.

They have been called a guest house, tiny house, Ohana, carriage house, or backyard cottages and have been around for centuries.

There is a more recent surge in popularity across the country as legislation and zoning regulations continue to be changed to encourage the addition of ADUs to positively impact the shortage of about 7.3 million affordable and available rental homes, according to Housing Matters.

These tiny homes offer a budget-friendly solution for homeowners grappling with sky-high property prices and help tackle the pressing issue of affordable rental housing.

ADU Demand leads to New Lending Products

It is no surprise ADU’s aren’t free and the money has to come from somewhere. The increased demand has created some new and interested ways to finance your ADU.

Read more about financing an ADU, here.

ADU Housing Growth

In some cities where ADU’s are not popular, you may have one person ask, “What is an ADU rental?”. It has not caught on everywhere. That is not the case in places like Los Angeles, CA or Portland, OR.

What’s Driving the ADU Craze?

Several factors are fueling this trend. Ascending housing costs have caused many to seek alternative, more affordable solutions to secure their living space.

With home prices reaching new heights, people are searching for alternative ways to secure their own space without going broke or raising monthly expenses.

Secondly, changing family dynamics have created a demand for flexible living arrangements to accommodate multiple generations under one roof in residential areas.

ADUs: The Affordable Housing Heroes

Accessory Dwelling Units provide an ingenious solution by utilizing unused land on homeowners’ properties.

They aren’t making any more land, so we have to do more with the land we have.

Let’s be honest; the real estate market has gone a little crazy. 

By constructing small structures on these plots, they can earn extra income through rent while simultaneously offering much-needed housing options in areas where traditional homes may be financially out of reach for many.

This double whammy has positioned ADUs as a potential game-changer in the battle against housing affordability woes across the country.

ADU’s in Real Estate

I like to let data speak for itself because it is hard to argue with.

Do ADUs increase property value?

More than likely, yes. Especially in areas like California where some homeowners are seeing 10-35% increase in value according to an article on Realtor.com.

What is interesting is some areas see a decrease in value. I personally think it is a stretch to say an ADU would cause the value of a home to decrease. I have never seen a property with an extra living quarters lose value.

Even if one only used the space for storage, it should cause no less than a Zero change in value. I can say, ADUs are not appreciated in some places and therefore not seen as valuable.

Supportive Programs for Developing ADUs

Programs are being developed to encourage the construction of ADUs. These initiatives provide cost-effective housing options and help build sustainable communities.

Recent Legislative Changes for Accessory Dwelling Unit Adoption

States are passing laws to promote Accessory Dwelling Units use for affordable housing. California’s Senate Bill 13 reduces barriers by eliminating fees and easing parking requirements.

These changes reflect the recognition of ADUs’ benefits, from affordable housing to increased property values and extra income for homeowners with some even addressing changes with property taxes.

State Initiatives Promoting ADU Construction

To tackle the housing crisis, many states have launched supportive programs. For example, California has passed new laws that make building structures easier. 

Meanwhile, Oregon has introduced the Reach program, which offers financial incentives to homeowners who build these units on their property.

The Role of Pre-Approved Design Plans

Some cities are taking it further by offering over 70 pre-approved ADU design plans. Los Angeles is leading the way with its ADU Standard Plan Program.

This genius idea allows homeowners to choose from various city-vetted designs, making construction more straightforward and affordable.

Homeowners can realize their Accessory Dwelling Units dreams by using these support programs. Just remember to research local regulations, as they can vary. 

Design Flexibility & Accessibility Features

ADUs: the chameleons of housing. They can be customized to fit your style, whether you’re a modern minimalist or a traditionalist.

It may not seem like a lot of square footage, but 400 square feet can produce a highly functional ADU. 

Creative space must often be utilized to live in these spaces efficiently.

DIY full Murphy Bed

Some creative ways to use small spaces are:

  • Storage in Stairs

  • Folding or Murphy Beds

  • Vertical shelving

  • A couch that converts to a bed

  • The desk area is also used for dining

  • Storage nooks

Universal Design Elements: Making ADUs Accessible

ADUs aren’t just pretty faces. They incorporate universal design elements like zero-step entrances and wide doorways, making them accessible to everyone. 

Check out this summary of accessibility standards.

Remember: good design isn’t just about looks; it’s about functionality too.

Environmental Sustainability Aspects

An ADU is like a tiny superhero for the environment. Its smaller size means it uses fewer resources during construction and maintenance.

Let’s not forget about less upkeep in general.

How fast could you clean a 400-square-foot space compared to your current home?

Sustainability factors when designing new residential structures

Sustainability should be the cool kid on the block when designing new tiny homes.

From choosing materials with low environmental impact to adding solar panels, you can make your Accessory Dwelling Units an eco-friendly paradise.

And guess what? Going green is beneficial for the environment, but it can also help save you money, as an ADU requires less energy.

By reducing utility costs and increasing property value, your sustainable ADU will have everyone green with envy.

To dive deeper into sustainable Accessory Dwelling Units, consult a pro about green building practices

Steven Dietz on Solving the Housing Affordable Crisis

This video is compelling, and Steven Dietz, the Founder and CEO of United Dwelling, is a wonderful and well-versed advocate for this mission. This was at an Upfront Summit.

Video Credit: YouTube – Upfront Summit

final thoughts

In conclusion, the increasing popularity of Accessory Dwelling Units in the United States can be attributed to many factors, including the pressing need for affordable housing solutions and the implementation of supportive programs that encourage their development.

The Accessory Dwelling Units offer many enticing benefits, from financial advantages and design flexibility to environmental sustainability and positive societal impacts.

Beyond their practical advantages, these small spaces play a crucial role in preserving the character and integrity of neighborhoods, allowing communities to make the most out of limited living space.

What can an ADU do for you? How can an ADU impact your life?

Frequently Asked Questions

What is the meaning for ADU?

Accessory Dwelling Unit.

What’s one drawback of an ADU?

Losing yard space is a big drawback and some would consider the increase in property taxes another drawback.

Is an ADU a good investment?

ADUs can be a good investment for several reasons. They can provide additional rental income, increase property value, and offer flexible living arrangements.

Do you need a permit for ADU in California?

What is the new ADU law in California 2023?

The new laws have lifted limitations on minimum lot size, ADU lot coverage, floor area ratio, and other similar requirements. The new laws also allow for 2-story ADUs in some instances and provide more flexibility in where ADUs can be built.

Is it true that some people use an ADU as alternate housing to house family members?

Yes, some property owners will utilize the addition of an ADU to care for family members and keep them near the main house. The cost of elderly care has increased, and utilizing an ADU could be an excellent option.

How do I finance my ADU build?

You can utilize finance products such as construction loans, HELOCs, Home Equity Investments, Renovation loans, or hard money.

What’s the deal with ADUs? Is it just a fad?

An Accessory Dwelling Unit is a clever solution to housing shortages in crowded areas, allowing homeowners to make some extra cash. AccessoryDwellings.Org has more insights on this game-changing trend.

What are the pros and cons of an ADU for rental housing?

An Accessory Dwelling Unit can bring in extra income through rent and boost your property value, but it also comes with initial investment costs and possible regulatory hurdles. Get the full scoop on Investopedia’s comprehensive article.

Can an ADU be sold separately from the primary property?

It’s possible. Learn more about a new law to allow ADUs to be sold separately from the main residence. Deciding to sell an ADU separately may be based on how much value the property has with and without it included in the sale.

Can an ADU have a separate address?

This is up to local laws, as a separate address may change the parcel’s zoning.

What are the rules with ADUs and HOAs?

The rules regarding ADUs and HOAs may vary, but many HOAS have covenants that do not permit ADUs.

Author
  • Erin Hybart

    Meet Erin, a real estate enthusiast with a wealth of knowledge and an insatiable curiosity for all things Real Estate and living with intention. She passionately advocates for alternative, affordable, and eco-friendly housing solutions. She believes in pushing the industry's innovation boundaries and thinking outside the box. As a licensed real estate agent in Louisiana, Erin dedicates herself to assisting clients in buying and selling properties and mentoring fellow agents to succeed in their own Real Estate businesses. In addition to her professional pursuits, Erin channels her expertise into captivating house-flipping adventures.

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