What Is an ADU? Can It Add Value to Your Property?

Peter Chambers

Feb 28, 2023

what is an adu

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What is an ADU? The acronym stands for an accessory dwelling unit, and it’s a must-add to your lexicon if you’re into tiny homes. Why? It’s a way to get around the frustrating planning and zoning restrictions that prevent such builds on many residential lots. 

The right ADU could also add considerable value to your property while providing a meaningful solution to the housing crisis. Let’s take a closer look at what an ADU is and how you can use one. 

What Is an ADU, Defined? 

By strict definition, an ADU is an attached or detached structure that provides independent living for one or more people, located on the same parcel as a traditional single-family dwelling. That means the term includes garages converted to mother-in-law suites and tiny homes separated from the primary residence. It excludes things like sheds — unless you soup them up. More on that later. 

Can an RV be an ADU? Yes, if it has power and water, although many jurisdictions have restrictions about parking these vehicles on your lawn. 

Is it possible to have more than one ADU? The answer here is also yes. However, it all depends on where you live and the local rules. Your first step in any ADU project is to locate your planning and zoning board and apply for all requisite permits. Failure to do so could cost you big time — local authorities can require you to remove your structure at your expense. 

Types of ADUs to Consider 

Are you considering adding an ADU to your property? You have multiple options, especially today. Why not contemplate how one of these ideas fits into your vision? 

  • Souped-up Tuff Shed: Some savvy builders realized they don’t have to do all the hard framing work. A big-box hardware store Tuff Shed provides the perfect exterior — some models even come with attached porches. You’ll still need to run electrical, plumb and insulate your model, but it saves considerable building time. 
  • Get it on Amazon: A quick Amazon search for tiny homes reveals scores of prefab kits that you can have delivered right to your door. An extra fee sends out the pros to construct many models if you’re uncertain about your DIY skills. 
  • Build a tiny cabin: Cordwood cabins are relatively easy for even novices to build. All you need is cordwood, mortar and possibly a few colorful bottles to light up your exterior with miniature LEDs, making it look like something out of a fairy tale. 
  • Garage conversions: If your property features a huge garage, but you have few vehicles, why not convert it to living space? Many such structures already feature separate entryways. Your primary concerns will be running plumbing and electrical and deciding what to do with the garage door. 
  • Tiny homes on wheels: THOWs offer the advantage of letting you hit the open road. However, you should know that most jurisdictions classify these as RVs, meaning they won’t have the same impact on your property value. Additionally, they are subject to the same rules and restrictions as RVs regarding parking. 

How ADUs Add Value to Your Property

Site-built ADUs add value to your property by enhancing the total occupiable living space. However, that’s not the only thing that makes them attractive to many homebuyers. 

Consider the soaring cost of housing these days. Many families have taken to multigenerational living in the wake of the crisis merely to survive. They may move in older relatives to spare assisted living costs or give adult children an opportunity to save a downpayment for a home of their own. It’s much more convenient for Grandma or Junior to have an independent space rather than trying to force cohabitation on two households. 

Ideas for Generating Revenue With an ADU

The right ADU can also help you generate revenue with your property. How? You can rent out these spaces as long-term rentals or vacation properties and rake in residual income for minimal upkeep costs. 

Maybe you have land but aren’t interested in the DIY lifestyle. Have you considered charging site rent for a long-term tenant to construct an ADU on your property? You’ll have to haggle out the legal details, but the overall process is similar to how trailer parks function. Be sure to consult a reputable attorney to hammer out the agreement. 

If you like banging hammers, why not build one ADU or more to use as vacation rentals, especially if you live in an attractive tourist destination? You can even get creative with treehouse designs, setting your property apart from others on the listing service. 

Maybe you want to be part of the solution to the housing crisis. If so, constructing an ADU and renting it out at an affordable rate to a needy family could make you a hero — all while providing a residual income stream. You’ll also save yourself much of the maintenance associated with vacation rentals. Your washing machine will thank you. 

What Is an ADU? 

You now know how to answer when someone asks you, “What is an ADU?” Is this type of structure right for you? 

The right ADU can enhance your property value and provide a residual income stream. Explore what you can do today. 

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