What is an ADU? [2024 Insights] Everything You Need to Know

Having some extra plot space for future use or renting purposes is a great idea indeed. This not only offers convenience of use but also is a long-term investment to perhaps rent the extra space. You might wonder what the technicality of an Accessory Dwelling Unit (ADU) is. But it isn’t as complicated as it sounds! 

In the growing urban lifestyles, ADU offers much more affordable housing options for potential candidates. Everyone looks for some cost-effective renting or owning option as real estate continues to rise every single day. ADU spaces are surely the solution! 

ADU already comprises the land and doesn’t need an extra plot for construction. This enhances smart growth within the existing space of the urban landscape. ADUs are also used for multi-generational living. It is an unbeatable option to stay separate as well as close to your loved one, isn’t it? 

For future income prospects too, having an ADU is a great choice for sure. All in all, versatile and flexible, ADU comes with loads of benefits. 

What Is an ADU? 

Still wondering what an ADU is? Well, an accessory dwelling unit, or ADU, is basically a secondary living space. It is located on the same property, which is the primary residence. Do you know ADUs are also known as granny flats, in-law units, or garage apartments? When someone asks, What is an ADU? they might be answered using these interesting names too! 

The ADUs are smaller than the main house or property. These can be attached to the main plot or remain as a separate, standalone structure. Moreover, these are fully functional with all the amenities, just like another house. 

When we consider the question, What is an ADU?, the primary thought is that it offers convenient and affordable housing options. ADU serves a variety of purposes and can be used as an additional living space.

Adult children or elderly parents can live in ADUs while staying close to their families and also gaining a sense of independence. You can rent an ADU as a guest house, office, or residential property and earn an extra source of income as well! 

What Types of ADUs Are There? 

There is always a lot of concern regarding what is an ADU and what are its common types. Let us look at some of the most common types of ADUs. 

Detached ADUs 

These ADUs are separate from the main house and are mainly standalone structures. These offer a completely independent space. Providing maximum privacy and seclusion, these can be used as backyard cottages, guesthouses, etc. 

Attached ADUs 

These are built on the additional spaces of the main house or plot. They share a wall with the primary residence but have a separate entrance. These offer privacy and also maintain proximity to the primary residing place. 

Internal ADUs 

These are also known as junior ADUs. These are built by converting a part of the primary residence into a separate unit. These may or may not have a separate entrance, as per requirements. 

Prefab or modular ADUs 

These are pretty manufactured units that are delivered to the property and then installed. These can be attached or detached as per preferences. Moreover, these offer a quicker and more cost-effective construction option. 

Pros and Cons of ADUs 

When we look at what an ADU is, we have to consider all the pros and cons that an ADU is surrounded with. 

Pros 

• ADUs offer more affordable housing options in the expensive and surging real estate market. They cost less to maintain and construct, as these already are on a plot. 
• Homeowners can easily rent their ADUs as residential property or for any commercial use. This helps in generating an extra source of income with ease and convenience. 
• These are also ideal for accommodating family members and making it a multi-generational space. 
• ADU increases the value of your property. It is an attractive feature for potential buyers and significantly gains more returns. 
• It uses the land efficiently and provides convenient housing options. There is no need for new land buying or development. 
• These are flexible and versatile options for various needs. Rental units, guest houses, offices, and many more purposes can be served by an ADU. 
• These are also environment-friendly, as they need fewer materials for any construction and also reduce the carbon footprint. 

Cons 

• There might be local laws and restrictions, which may often be a hurdle in keeping or renting an ADU. There might be size or location restrictions that need to be checked beforehand. 
• Redevelopment and financing costs have to be borne, as traditional lenders may often not recognize the value of an ADU. 
• If one rents an ADU, common outdoor spaces, proximity, and sharing of resources can impact one’s privacy. 
• Managing an ADU is an extra task that needs to be carried out. Managing the property, tenants, and rental laws can be a regular task, which might be overwhelming. 
• Renting an ADU requires extra parking facilities and amenities. These can often create logistical challenges. 
• If an ADU is poorly designed, it may affect the architectural style of your place. It will reduce the property value as well as the aesthetic appeal of your place. 
• If an area has many ADUs, then there might be a competitive risk and lower rental income potential. 

How Much Does an ADU Cost? 

• Since we already came over the answer of what is an ADU, there might be other queries prevailing regarding its costs. Well, the definite answer can vary from place to place, given the many factors involved. Apart from location, size types, material, design, etc. are the things that determine the cost of an ADU. 
• Detached ADUs can be expensive as new construction is involved. These may range between $150,000 and $400,000 or more. Attached ones may range from $100,000-$300,000. Similarly, the modular ADUs range varyingly. 
• The larger sizes and complexly designed ADUs cost more than the smaller and basic ones. Moreover, the costs of site preparation, construction, materials, and finishes all determine the overall costs. 
• There might also be permit fees or labor costs involved in the construction and maintenance of ADUs. Infrastructure and additional features and amenities all have to be taken into consideration while determining the cost of an ADU. 

Will My City Allow Me To Build An ADU? 

Whether you are allowed to build and rent an ADU depends on the laws and regulations of the city. The rules may vary from various municipalities as well as neighborhoods of the same city. 

It is important to check the laws related to local zoning authorities before proceeding with an ADU. You may have to have permission or some specific restrictions on size, design, etc. Understanding all the requirements and restrictions imposed by the local authorities is important to be adhered to. 

By obtaining the necessary permits and approvals, you can have an ADU. The HOA rules and recurring legislative changes should all be well-known to complete the formalities of having an ADU. 

How Long Does It Take To Build An ADU? 

• The actual time limit for building an ADU depends on factors like construction, planning, designing, and eventually getting permission from the authorities from the same. 
• You have to start with the plan and design of the ADU. This includes researching well about the same and working with architects and site planners for building an ADU. Evaluation of the site, estimating the budget, and talking to various dealers all require a lot of time. 
• Applying for getting permission from the local authorities is the next step, which further requires more time. Reviewing design and asking for approvals takes time as it involves corrections and resubmissions. 
• The site also takes a good amount of time to be prepared. It is cleared and graded and prepared well for utility connections like water, electricity, etc. 
• Final construction requires around a year as the structural analysis, planning, foundation, and final touches need expert guidance. 
• All in all, you may expect 6 to 12 months for minimal low-grade projects, or 12 to 24 months for a more complex one. 

How Do People Pay For ADUs? 

There are many financing options that are easily available for individuals to pay for ADUs. 

• You can use personal savings as it is a straightforward process, and you can stay away from all the hassle of interest or obligations. 
• You can also go for home equity loans, as these have lower interest rates. These can be used to finance your ADU purchase. 
• You can even opt for short loans for specific procedures like construction. These provide funds in times of construction needs and help in preventing further delays in the construction of ADUs. 
• If your area is covered under some government schemes or subsidies, you can take advantage of them for sure. These may offer low- or no-interest loans as well. 
• If you have an existing property, renting it and using the rental income for purchasing an ADU can be an interesting investment. 
• Joint ventures through partners or family members can also be helpful in purchasing an ADU. 

ADU vs. JADU 

We know what an ADU is, but what about JADU? Accessory Dwelling Unit (ADU) and Junior Accessory Dwelling Unit (JADU) are both types of secondary living units. Both of them can be added to the existing space or plot. However, there are slight differences between both of them. Let us have a look. 

Accessory Dwelling Unit (ADU) 

• These secondary units are fully functional and can be either detached or attached from the main residence or plot. 
• They have their own kitchens, bathrooms, living spaces, and all basic amenities to reside in. 
• Generally, they can be up to 800-1200 sq. ft. The size mainly depends on the local rules and regulations of the authorities. 
• These typically need a permit to be built and have to adhere to the building codes. 
• ADUs are commonly used as guest houses, multigenerational spaces, or as renting houses. 

Junior Accessory Dwelling Unit (JADU) 

• These are basically smaller and more limited versions of ADUs. 
• These are built within an existing residence. Consequently, these also share the facilities with the primary residence. 
• These are typically up to 500 square feet. 
• JADUs does not have a full-fledged kitchen but rather a small kitchenette. 
• Bathrooms can be shared, or one can also create separate ones as per requirements. 
• It is not essential to have a separate entrance. They may or may not have one. 
• These can be used for renting purposes or as an extended space for family members or guests. 
• These have a simple permit process as compared to ADUs. 

Bottom Line 

ADUs are surely worth having, as they not only add more functionality but also increase the value of your property. These are very attractive to potential buyers, as the more functional the space, the more returns it promises. The various types, sizes, costs, and designs of ADUs can all be explored and chosen.

Offering a flexible and versatile space, these are also great ways to enhance your income! No wonder, these are surging high in demand as well as popularity.