ADUs, or accessory dwelling units, refer to secondary homes, houses, or apartments that are located on the same property as a main home. Sometimes ADUs are also called in-law suites or guest houses.
The rise of multigenerational households is reshaping home design and renovation priorities. According to the 2024 Angi State of Home Spending Report, with 1 in 4 homeowners living in multigenerational households, these households are more likely to be taking on larger renovations and adding lifestyle-enhancing features to their homes.
An ADU can serve many purposes. Many families use ADUs to accommodate a growing family, whether that means creating a space for aging parents or an apartment for older children. Other people build ADUs with the intention of renting out the space to make passive income. You might also simply want to build it for your own purposes, such as a stand-alone studio or additional storage space away from the house.
Many people choose to build ADUs from scratch behind their main homes on their lot. However, you do not need to have a massive lot or big yard to have an effective ADU. A lot of ADUs even start as existing structures on your property, such as a shed or detached garage.
Not only can you make passive income by renting out your ADU, but building an ADU can increase your property value by up to 30 percent, making it a smart financial investment for a lot of families. An ADU is always a secondary addition to the main home, and is owned by the owner of the central home. An ADU can’t be bought or sold separately from the main property.
ADUs that are intended as housing units are often subject to additional local regulations. In most cases, they must have their own private entrance, a bathroom, and a full kitchen with counters, sink, running water, cabinets and a stove.
The cost of an ADU varies depending on your intentions. A basic garage conversion might cost as little as $20,000. Building a detached ADU from scratch is likely to cost $40,000 at the basic level and could reach $125,000 or more, depending on your goals.
Be aware that an ADU will change a lot about how you interact with your property. It will likely increase property taxes, and their separate utilities will increase your energy costs. Plus, they’ll need all the same maintenance and upkeep as a main home.
Building an ADU is a complex construction process and might not be right for that weekend-warrior DIYer. Because ADUs tend to involve running utilities such as electricity, water and gas lines to the structure, much of the work may require permits and licensed professionals. So it’s really important to find the right contractor who can help you along with the process and make sure that this job gets done well.
