ADU Construction Cost: Price and Benefits of Having an ADU

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

Get Started with ADU
Benefits of ADU
ADU Construction Regulations
Investing in an ADU
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

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

is it worth it to invest in an ADU? FOr the most part, it is. However, that ultimately depends on how you choose to use the unit after it is constructed. The advantage of building an ADU compared to an average-sized home is that you will only have to spend for the structure. After all, the lot is already yours, so you do not have to pay for it. At the same time, these units could be minimal in size, requiring fewer construction materials.

ADU AS AN AFFORDABLE HOUSING OPTION

If you are a tenant searching for affordable housing options, ADUs could be a great choice, although it depends on what you are looking for. If it is only about the expenses, renting it could be at around the same rates or even higher than apartments of the same size. However, if you want to live in a single-family neighborhood, an ADU is among the most affordable options.

If you rent the ADU of your relative’s property or a person you know, you may have to pay for the rent at a discounted rate. However, this is not certain and, thus, should not be weighed in your decision. Another benefit of renting from a homeowner rather than an apartment is the lesser likelihood of rent increase.

Depending on where you live, ADUs could actually be more cost-effective for you. Some municipalities regard these structures as part of their affordable housing and anti-displacement strategies. FOr instance, in Santa Cruz, California, programs are implemented to support lower-income households in ADU construction and help them reside in such units for reasonably priced rates.

The costs for ADU construction will not necessarily be cheap. However, you can save a large sum of money compared to what you would have expended for an average-sized home in a single-family lot. Regardless of how much you invested, you could eventually earn that money back if you choose to rent the unit out or sell your property. If you choose the former, you are bound to get tenants in no time as ADUs are currently on-demand for their affordability and the other benefits.

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.

Accessory Dwelling Units / ADU’s