ADU: The Ultimate Guide for Modern Homeowners

Benefits of ADUs

As a homeowner, adding an ADU to your property brings several benefits that also extend to the community. Here are some key advantages:

• Your Home’s Worth Goes Up: Building an ADU on your property can boost your home’s value. This is especially true in areas where housing is hard to find. Having an ADU makes your property way more appealing to people looking to buy, so you can sell it for more money in the future.
• A Budget-Friendly Way to Add More Room: Instead of building a whole new house or moving to a bigger place, constructing an ADU is usually cheaper. It’s a budget-friendly way to get extra living space without having to do a ton of renovation on your current home or move somewhere else.
• Extra Cash Flow from Renting It Out: One of the best things about putting up an ADU is that it can give you some extra cash flow. You can rent out the ADU and use that rental income to help pay your mortgage or other bills. ADUs usually come with everything a renter needs, so you can rent them out as their own separate living spaces.
• Housing for the Whole Family: An ADU gives your family members, including adult children and aging parents, a convenient and separate place to live. They get their own space and privacy, but they’re still close by. This arrangement is a great way to keep the family connected while living separately.
• Flexible Living Options: The good thing about these secondary suites is you can adapt them to fit whatever your situation is. You can use them for various purposes, such as living spaces for family members, having guests stay over, renting them out, or setting up a home office.
• Homes for More People: With ADUs, more people in your community can get more affordable housing options. They’re usually smaller and use less energy than regular houses, so they’re a good fit for people who are just starting out or those with lower incomes. Some cities have special programs to help households with lower incomes build an ADU or rent one for a good price.

Key Features of Accessory Dwelling Units

ADUs, also called granny flats or secondary suites, often come with basic amenities to make them fully functional living spaces. Although the specific features may vary depending on the homeowner’s preferences and local regulations, here are some main elements that define an ADU:

• Independent Living Space: An ADU functions as a separate living unit. It has its own entrance, living area, kitchen, and bathroom. This means you can live on your own while still being connected to the main property.
• Compact Size: Secondary suites are usually smaller than the main residence. The size is often limited by local zoning regulations, but it makes them easier and cheaper to build and maintain.
• Separate Utilities: In some cases, ADUs have their own water, sewer, and electricity connections. However, it’s also common to see granny flats that share the main house’s utilities. With separate utilities, you have more flexibility and independence.
• Architectural Compatibility: ADUs are usually designed to match the style of the main residence so the entire property has a cohesive look and feel.

How to Choose an ADU Type

When it comes to choosing an ADU type for your property, you’ll find several options, each with its own perks. Knowing the different types of secondary suites can help you pick the right option that suits your needs and goals.

• Detached ADUs: These options are stand-alone structures, usually in the backyard or on the side of your house. Detached ADUs give the most privacy and independence since they’re completely separate from the main house. A detached ADU is a great choice if you plan to rent it out or give family members a separate living space.
• Attached ADUs: In an attached ADU, the structure is connected to the main house, either by sharing a wall or being built above the garage. This option can be cheaper than a detached unit since you’re using some of the existing parts of the main house. Attached ADUs are a good choice if you want the secondary suite to be closely connected to your main home. It’s also great if you have a tight space because it lets you expand your living space without sacrificing too much yard space.
• Garage Conversions: Turning an existing garage into an ADU is an efficient way to use the space you’ve got without needing to build something new. It’s usually more affordable, too. A garage conversion could be a great option if you have a garage that isn’t being used much. Here’s a RenoFi guide for garage conversion ideas you might want to check out.
• Junior ADUs (JADUs): JADUs are a type of attached ADU made by converting a basement, attic, or spare bedroom. These interior ADUs are generally smaller than other ADUs but can still function as a separate living space. JADUs work well if you want to add living space without making big changes to your house.

Legal Considerations for Your ADU

Before you add an ADU to your property, there are a few important legal and regulatory aspects you’ll need to consider:

• Zoning and Building Codes:  Design requirements, size limits, and where ADUs are allowed can vary depending on the city or county. So, it’s important to make sure your ADU plans follow your local zoning rules. You’ll also need to ensure your ADU meets all the necessary building codes for safety.
• Rental Laws and Landlord-Tenant Regulations: If you plan to rent out your ADU, you’ll want to get familiar with the landlord-tenant laws in your area. This includes understanding your rights and responsibilities as a landlord, as well as properly drafting rental agreements.
• Owner-Occupancy Requirements: Some places require the homeowner to live on the property if there’s an ADU. So, if you’re looking to rent out both the main house and the ADU, that might not be allowed.
• Subdivision and Condo Conversions: In some cases, you may be able to legally subdivide your property and sell the ADU separately. But this gets into complex real estate laws. You’ll want to check the rules and consider getting professional advice.
• Existing Mortgage and Lender Approval: Don’t forget to check if your current mortgage allows for an ADU or property subdivision. Your lender may need to approve any changes, or you may have to refinance.

The legal side of ADUs can be a bit complicated, so it’s a good idea to consult a local expert before hiring a contractor. That way, you can make sure your ADU project stays on the right side of the law.

Design and Construction Considerations

Once you’ve figured out the legal and regulatory aspects, the next step is planning the actual design and construction of your ADU. Here are a few important factors to consider:

• ADU Types: As we covered earlier, you’ve got a few different ADU options ― detached, attached, garage conversions, and JADUs. Each one has its own advantages, so consider which option best fits your property and your needs.
• Size and Layout: ADUs can vary a lot in size, typically ranging from around 500 to 1,200 square feet in many areas. The layout is important, too. You want to make sure the space works well for how you plan to use it.
• Integrating with the Main House: If you’re doing an attached ADU or a conversion, you’ll need to think about how it connects to and interacts with your main house. Factor in things like entryways shared utilities, and the overall aesthetic of your property.
• Working with Professionals: Unless you’re a construction professional yourself, you’ll probably want to bring in some experts to help with the design and building process. Architects, contractors, and local ADU specialists can ensure your extra living space is built to code and fits your vision.

Conclusion

Adding an ADU to your property is a great way to create more living space, earn rental income, or host family members. By planning carefully and taking into account the important factors, you can manage the process smoothly and enjoy all the benefits an ADU brings.

Although adding an ADU is considerably cheaper than building a standard home, it’s still an expensive project that would likely require taking out a loan. Not to worry, though. If you need to finance your ADU project, RenoFi offers flexible loans to help you bring your dream to reality.

RenoFi loans are the smartest way to finance a home renovation project. Unlike traditional loans, which are based on your current home value or require you to refinance your primary mortgage and give up your low rate, RenoFi loans are based on the after-renovation value of your home. This allows you to borrow, on average, 11x more, get a low monthly payment, and keep your low rate on your first mortgage.