What is an Accessory Dwelling Unit (ADU)?

An Essential Property Management Term

An accessory dwelling unit (ADU) is a self-contained living space that is an extension of an existing property. Also known as mother-in-law suites or casitas, ADUs have their own kitchen, bath, and sleeping area, but it couldn’t be sold on its own as a separate property. An ADU might be attached to the main property or could be built as a stand-alone unit, but it’ll generally make use of the water and energy connections of the main property, Investopedia notes.

There are six main types of accessory dwelling units, according to the American Planning Association:

  • Detached ADUs
  • Attached ADUs
  • Attached (Above Garage) ADUs
  • Interior (Converted Garage) ADUs
  • Interior (Basement) ADUs
  • Interior (Upper Floor) ADUs

Am I Allowed to Build an ADU?

Great question! The answer varies depending on where you live, so be sure to check your local zoning codes to see if you can build an ADU. If you live or manage property within an HOA-run area, check with them as well to avoid any potential issues.

The Pros and Cons of Accessory Dwelling Units

So, should you create an ADU to supplement your rental income? The answer will vary from landlord to landlord, particularly because zoning laws ban ADUs in many parts of the country. But assuming you’re legally allowed to have an ADU on your main property, it’s important to understand the benefits and drawbacks as outlined by Investopedia to get the complete picture.

The Pros of ADUs

  • An ADU can provide extra income via monthly rent
  • It may add additional value to your property
  • ADUs increase the amount of space available

The Cons of ADUs

  • If you use an ADU as a rental, it’ll require additional maintenance
  • ADUs cost money to build, may increase your property taxes, and the extra utilities will add to your monthly expenses
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