What Is an ADU?
An ADU is a small residence that shares a single-family lot with a larger, primary dwelling. It's an independent, self-contained living space with a kitchen or kitchenette, bathroom and sleeping area.
— AARPAn ADU can be located within, attached to, or detached from the main residence. It can be created out of an existing structure (such as a garage) or built anew.
If you're thinking about whether an ADU makes sense for you as a buyer or a homeowner, here's some useful information and benefits that ADUs can provide. Keep in mind that regulations for ADUs vary based on where you live, so lean on a local real estate professional for more information.
The Benefits of ADUs
Freddie Mac and the AARP identify some of the best features of ADUs for both buyers and homeowners:
Living Close by, But Still Separate
ADUs allow loved ones to live together while having separate spaces. That means you can enjoy each other's company and help each other out with things like childcare, but also have privacy when needed. If this appeals to you, you may want to consider buying a home with an ADU or adding an ADU onto your house.
Having an accessory dwelling unit on an existing property has become a popular way for homeowners to offer independent living space to family members.
— Freddie MacAging in Place
Similarly, ADUs allow older people to be close to loved ones who can help them if they need it as they age. It gives them the best of both worlds—independence and support from loved ones. For example, if your parents are getting older and you want them nearby, you may want to buy a home with an ADU or build one onto your existing house.
Affordable To Build
Since ADUs are often on the smaller side, they're typically less expensive to build than larger, standalone homes. Building one can also increase your property's value—an important consideration for long-term wealth building.
Generating Additional Income
If you own a home with an ADU or if you build an ADU on your land, it can help generate rental income you could use toward your own mortgage payments. It's worth noting that because an ADU exists on a single-family lot as a secondary dwelling, it typically cannot be sold separately from the primary residence. But that's changing in some states. Work with a professional to understand your options.
It's gone from a small niche in the market to really a much more impactful part of new housing.
— Scott Wild, SVP of Consulting, John Burns ResearchKey Takeaways
- Multigenerational living: ADUs provide privacy while keeping family close for support with childcare, aging parents, or daily assistance
- Cost-effective construction: Smaller footprints mean lower building costs compared to full-sized homes
- Increased property value: Adding an ADU can significantly boost your home's overall value
- Rental income potential: Generate passive income to offset your mortgage or build additional wealth
- Flexible use: Use as a home office, guest suite, or rental unit depending on your needs
Bottom Line
ADUs have some great advantages for buyers and homeowners alike. Whether you're looking to house aging parents, generate rental income, or simply add value to your property, an accessory dwelling unit might be the right solution. If you're interested, reach out to a real estate professional who can help you understand local codes and regulations for this type of housing and what's available in your market.
Curious If an ADU Is Right for You?
We'd love to help you explore your options—whether you're looking to buy a property with an ADU or add one to your existing home.
Connect With UsSources
AARP ADU Guide • Freddie Mac ADU Fact Sheet • John Burns Research • Wall Street Journal
