ADU Construction Cost: Price and Benefits of Having an ADU

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Are you thinking of constructing an ADU on your lot or renting one? Here’s everything you, as the homeowner or tenant, need to know about the construction of these types of small house units, the costs, and the benefits.

As the demand for affordable housing remains to gain traction, average-sized homes in single-family lots are no longer the only sought-after properties in the real estate industry. In fact, many now prefer to rent or reside in an accessory dwelling unit (ADU) because of the living conditions and marginal costs. For the same reason, homeowners deciding to invest in ADU construction steadily increases.

The question is, what exactly classifies an ADU? Think of it as a secondary residential unit in a lot with an already existing house. It is more than just a room for people to sleep in or a garage for them to store their belongings. ADUs come complete with all the necessary amenities regular houses do. That refers to the kitchen, bathroom, and a bedroom or two. While that sounds simple, the process before the constructed dwelling can be legally accepted as an ADU is anything but that.

Table of Contents

1. Get Started with ADU

2. Benefits of ADU

3. ADU Construction Regulations

4. Investing in an ADU

5. ADU as an Affordable Housing Option

GET STARTED WITH ADU

If you’re planning to construct an ADU on your lot, you must first know that there are three main varieties to choose from. Starting with attached ADUs, these residential units are connected to the primary dwelling. The opposite is detached ADUs, constructed in the same lot as the main house but separated by a certain distance. Meanwhile, converted ADUs are existing structures such as garages renovated to become living quarters.

There could be many reasons why homeowners decide to construct an ADU in their lot, despite the expenses this will bring. However, these are the three top purposes that stand out. The first one is to provide a dwelling for the three top purposes that stand out. The first one is to provide a dwelling for their relatives or elderlies in the family. ADUs give them privacy and independence, compared to lending a room for them in the primary house. Some even construct these secondary units to have a resting place when guests come over. However, other homeowners also take this as a chance to increase their property’s value and earn passive invome through rent.

BENEFITS OF ADU

Final Living Kitchen

Whether you are the property’s homeowner or the potential tenant, going for an ADU could benefit both parties in many ways. Specifically, here are some of them:

- Homeowners can make use of the available space in their lot.
- ADU is a cost-effective solution to extending your primary home.
- Renting an ADU can generate passive income.
- Constructing an ADU on your property increases its value.
- As a temporary tenant, ADUs are just the right size for your needs.
- Detached ADUs give you privacy and independence from dwelling.
- Compared to average-sized residences, ADUs are more environment-friendly

ADU CONSTRUCTION REGULATIONS

There are no strict regulations for constructing ADUs. However, if you plan to have the unit rented, that is no longer the case. You will need an ADU permit for that purpose, meaning you must follow the regulations, construction laws, and building and fire codes of your state or city. Depending on the requirements of your area, you may even need to provide a deed restriction, qualify for the amnesty program, and more.

Besides the local regulations, there could also be size, height, and spacing standards. What those specifically are may vary depending on the city or state you reside in. While these could be complicated and even limit the unit’s design, these must be followed before you can use the structure for passive income purposes.

INVESTING IN AN ADU

Considering an ADU? Building an ADU can be a cost-effective way to add living space. You already own the land, so the main expense is the structure itself. Plus, ADUs are typically smaller, requiring fewer materials.

ADU AS AN AFFORDABLE HOUSING OPTION

If you’re on the hunt for affordable housing options, Accessory Dwelling Units (ADUs) present an enticing choice, tailored to your needs and preferences. While rental costs may align with or slightly surpass those of comparable apartments, ADUs offer unique advantages, particularly if you seek the tranquility of a single-family neighborhood.

Renting an ADU from a relative or acquaintance may come with the added perk of a discounted rate, although this isn’t guaranteed and shouldn’t solely sway your decision. Moreover, leasing from a homeowner often means more stable rent, with fewer fluctuations compared to traditional apartment complexes.

In certain areas, ADUs are championed as integral components of affordable housing initiatives, fostering inclusive communities and mitigating displacement. Take, for example, Santa Cruz, California, where dedicated programs facilitate ADU construction, enabling lower-income households to secure these units at affordable rates.

While the initial costs of ADU construction may seem daunting, the long-term benefits are substantial. Not only do ADUs offer a more economical alternative to traditional single-family homes, but they also provide opportunities for rental income or property resale, potentially recouping your investment over time. With the current demand for ADUs soaring due to their affordability and versatility, finding tenants is often swift, ensuring a promising return on your investment.

Are you in need of help starting with constructing the secondary unit on your property? If so, trust us here at Small House Solutions to help you with preparing the site, materials, design, and layout. What as your ADU design ideas come into life from scratch to build.

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