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Monday, May 20, 2024

Which Type of Accessory Dwelling Unit is Right for You?

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The global pandemic disrupted and turned the lives of a majority of homeowners upside down.  Many homeowners found themselves out of work or with family members that were ill and needed extra care.  Due to these massive changes in lifestyles, homeowners got creative and began investing in accessory dwelling unit.  ADUs were and are continuing to be used as a method of additional income in addition to a space for family members. 

Though there are several types of ADUs, they all have a few common traits.  ADUs are smaller, independent residential structures on the same lot as a single-family.  To qualify as an ADU the structure must have a kitchen, bathroom, and separate entrance.  ADUs may share utilities and walls with the primary unit.  Additionally, accessory dwelling units will need a permit to be considered a formal ADU rather than an illegal apartment. 

Types of Accessory Dwelling Units

Detached Accessory Dwelling Unit

            Detached accessory dwelling unit have become very popular among homeowners who were searching for additional space for family members during the global pandemic.Detached ADUs are sometimes called granny flats or backyard cottages.  These types of ADUs offer the most privacy as they are essentially a second but much smaller home on the same property.  Detached accessory dwelling units will need their own sewer, water, electrical, etc.  Detached ADUs are perfect additions for homeowners who are interested in renting out the structure or for those that want their family members close, but still far enough away to give them space.  Additionally, detached accessory dwelling units are generally the largest of the accessory dwelling units which could result in higher rental incomes or higher resale value. 

Keep in mind that detached accessory dwelling units require a permit to build.  Every city has its own ADUs restrictions and requirements that may include height restrictions or exterior aesthetic requirements.  Constructing a detached accessory dwelling unit can cost anywhere from $200,000 to $400,000 for a single story and $300,000 to $550,000 for two stories.  While the price of the detached unit is high, it can raise your property value by 20% to 30% though this depends on the market. 

Basement Accessory Dwelling Unit

            Just because you have a finished basement does not mean you can classify the space as a basement ADU.  Basement units require plumbing and ventilation for a separate kitchen and bathroom.  They also require some form of window for an emergency exit and natural light source.  One possible issue with converting a basement into an ADU is ceiling height.  Most basements have lower ceilings that will not meet minimum ceiling height requirements.  In this case you may need to dig down into the existing floor, which could create a large and expensive project.  Basement ADUs should also have a separate entrance from the main home.  While converting a basement into an ADU is not always easy and can be costly, they do have benefits.  Basement ADUs are cool in the summer, offer a great deal of privacy, and generally have a good resale value. 

Above Garage Accessory Dwelling Unit

            Above garage units can cost anywhere from $15,000 to $30,000 to convert depending upon the size of your garage and where you live.  This type of ADU will require insulation, drywall, flooring, HVAC, and water heater as well as electrical service upgrades for appliances.  The conversion could also require that you add a window for an emergency exit, install a private entrance, and add a full bathroom and kitchenette.  Overall, above garage accessory dwelling units are very popular for those that do not have extra yard space for a small detached ADU or those that do not want to convert a part of their main home into an ADU. 

Home Addition Accessory Dwelling Unit

            If your home is lacking in space an addition may be the best way to add an accessory dwelling unit.  A home addition of approximately 400-square-feet will cost around $40,000.  The price will go up depending upon the size of the addition as well as the construction required.  A home addition needs wall support beams, new floors, plumbing, electrical wiring, drywall, insulation, windows, doors, and siding.  The best way to proceed with a home addition is to find a general contractor who can oversee the project. 

Regardless of which type of accessory dwelling unit you are interest in you should consider your area’s rules and zoning requirements on ADUs.  Remember that not every area allows ADUs to be rent out.  Before you make the investment in the ADU speak to a trusted real estate agent and make sure it will be profitable as a rental and livable for if family members will be living there. 


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