How an ADU can Save or Make you Money

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An Accessory Dwelling Unit, commonly referred to as an ADU, is a small second property attached to or nearby the main house.

Although ADUs were popular about a century ago, the middle of the 20th century was characterized by a marked decline in their construction. However, recent years have shown substantial revitalization in this sphere of the housing market, due in large part to the retirement of Baby Boomers and the boomerang phenomenon of adult children moving back home.

In this article, we’ll discuss the benefits of ADUs and why the trend of building them has resurfaced. Even though they’re small properties, they’re making a pretty big splash!

Where are ADUs found?

ADUs may be located in basements, carriage houses, above garages, or even in a “tiny home.” Other common names for ADUs include in-law units, secondary dwelling units, and, affectionately, granny flats. They can be found in virtually every city in the United States, from Billings, Montana, to Buffalo, New York.

Why are ADUs built?

ADU behind model home in Annafeld

Accessory Dwelling Units may be constructed for a number of reasons, but some are more common than others. Many families start out needing a large home to raise children, but after the young ones have grown up and moved out, parents might find themselves needing to fill the proverbial “empty nest.” Some older adults, especially those in the Gen X demographic, are increasingly building ADUs in order to rent out the larger home property, or to provide a place for their aging Baby Boomer parents to comfortably stay.

ADUs may also be built to be used as a guest house, a live-in care facility for the ill, or even a play-place for very lucky children. Most often, however, rentals and family housing are the primary drive for constructing these units.

What are the benefits of an ADU?

Accessory Dwelling Units are not seen as separate properties, but rather an extension of a larger nearby home or property. For this reason, they are frequently used to make income from rentals. If renting isn’t of interest to the property owner, they will most likely use it to house a family member.

ADUs are great investments because they can either earn you passive income, or save you tons of spending by helping someone avoid the purchase of a separate home. Whether you’re looking to make money to offset your mortgage or keep a loved one nearby and save money, ADUs can help with both.

How are ADUs different from houses?

Although ADUs are constructed according to certain specifications, they are more similar to regular houses than they are different. One of the most important criteria for ADUs is that the square footage remains equal to or less than 800 square feet. Depending on one’s living area, there will also be municipal regulations for such units, as their construction is regarded with the same legal requirements as a full-sized home. 

It’s important to understand the process not only of constructing ADUs on a technical level, but to ensure that they are built according to proper housing codes. Failure to do so could result in fines or lost income.

Bottom Line

ADUs are making a comeback in the housing industry due to aging populations and the desire to generate passive income from real estate. They offer benefits to owners as well as live-in residents, and one can expect them to become increasingly common in the years ahead.

To learn more about ADUs and take a tour, visit us in our model home open 6 days a week.


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