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What Is an ADU?

by Cristina Oprean
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4 min. read

ADUs, or accessory dwelling units, have become increasingly popular in recent years. They can make an excellent addition to your home, potentially increasing property value, providing a private space for loved ones, and maybe even adding an extra income stream. But what exactly are ADUs, and can they work for you?

The Basics

ADU stands for “Accessory Dwelling Unit,” although they go by many other names, such as granny flats, in-law apartments and carriage houses. An ADU is essentially a self-contained living space. Typically designed for one or two people, it must be located on the grounds of a pre-existing single-family property.

ADUs cannot be bought or sold separately from the main property. Instead, they’re often built to house elderly relatives, adult children or guests who require a little privacy while remaining close to the family. However, in many cases, ADUs can also be rented out, either long or short-term.

Types of ADUs

ADUs come in many shapes and sizes. But to qualify as an ADU rather than an extension, they must be independent of the main home. That means they should have a private entrance, bathroom, kitchen and living space. They can either be attached to the main home or detached. Regarding utilities, ADUs generally share water and energy connections from the main house.

  • Garage ADU: Converting an unused garage into an ADU is an excellent use of space and one of the most common types of ADUs.
  • Basement ADU: Basement ADUs are another popular choice. They generally utilize an outdoor entrance to keep it separate from the main home.
  • Attic ADU: Transform that dusty old attic into a beautiful living space, complete with its own outdoor stairway to maintain privacy.
  • Detached ADU: A new building that sits on your plot of land but isn’t physically attached to your main home. Nowadays, you can often buy prefabricated or turnkey ADUs, or you can build your own from scratch. However, bear in mind that in some areas, it can be pretty difficult to obtain permits for detached ADUs.

How Easy Is It To Build an ADU?

Knowing the local zoning laws and regulations in your area is essential. ADUs are becoming increasingly more commonplace in recent years, but they mostly flew under the radar for a long time. However, throughout Canada and the U.S., regulations are easing to make building an ADU more viable. Having said that, you’ll often need to obtain a permit to build one.

For the most part, many municipalities encourage ADUs as they are seen to increase property values and generate more property taxes. However, there may be more pushback on a local level, with HOAs and communities concerned about overdevelopment. In addition, the rise of ADUs for short-term rentals, like Airbnb, can also cause contention.

Before you decide to build an ADU, be sure to check the local regulations and obtain all the necessary permits.

ADU Pros and Cons

If you’re sold on the idea of an ADU for your home, be sure to weigh the pros and cons before you start.

ADU Advantages:

  • Potential to add value to your home: Adding more habitable square footage to your home will almost always increase its value. Basement conversions are particularly sought out.
  • A multi-generational space: Providing a space for elderly relatives allows you to stay close as a family and avoid the expense of a care home. An ADU can also give adult children much-needed privacy and an opportunity to save up for their own place.
  • An additional source of income: Renting out an ADU can turn your unused space into a source of income while potentially providing homeowner tax benefits.

ADU Disadvantages:

  • Expensive: Building a fully furnished, quality ADU can be a pricey endeavor, with average costs running anywhere between $25,000 and $300,000. Once constructed, you may need additional insurance, especially if you plan to rent it out. On top of that, consider the extra utilities, property taxes and maintenance costs.
  • Potential difficulties with zoning: In some cities, zoning regulations can make it difficult, or sometimes impossible, to build an ADU. Be sure to consult a professional before making a decision.

Looking for homes for sale in popular areas across Canada and the U.S.? Check out the links below:

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