ADU? IDK

ADU? IDK

I’ve always had a thing for outbuildings. My love for them began when I was a little kid wandering the neighborhood (unaccompanied wandering and Allosaurus liver pate used to be a thing), and I discovered a mini-house some skilled craftsman had made for their children. Three rooms, including a mini-kitchen, contained in a ten by ten space. My six year old mind was blown at the thought of living space beyond the confines of a house.

My appreciation for them has grown over the years, and I have a soft spot for properties that have a converted carriage house, a freestanding studio, or a clever garden shed. It seems like I’m not the only one crushing on separate living spaces, accessory dwelling units (ADUs) are becoming a hot trend. 

ADUs are an additional living space on your property, generally in your backyard, and they’re used as living quarters for extended family, a home office, studio and rental property. The trend is driven by the recent need for home office space, the ease of renting out extra space through groups like Airbnb and VRBO, and the recent relaxation of laws restricting freestanding structures in many states and cities. 

If you are thinking about building an ADU, do some homework on cost and potential income. A fully functional ADU will essentially be a mini-house, so starting from scratch will involve permits, construction, plumbing, electric and HVAC. Have an existing structure like a detached garage that can be converted? Odds are pretty good your construction costs will be lower than starting from scratch. Have a handy disposition and a Home Depot nearby? They have ADU do it yourself kits starting around $11,000. 

If you live in a city with a high cost of living, or are in a popular part of town, your ADU could pay for itself in a few years. They also add significant value to your property value on resale so they can be a nice way to build wealth. I have a friend who was going to build a modest garage on their property, but after some research they decided to put up a three car garage with an apartment above. They used an equity line to finance the construction, and the rent fully paid for the loan amount. Essentially they got their three car garage for free, then they got top dollar when they sold their place since the buyers loved the addition. Not a bad ROI on their ADU, IMHO.