What Is an ADU?

An ADU (also referred to as an accessory apartment, secondary suite, or granny flat) is a separate residence built on the same lot as a single-family home. ADUs are fully functional living quarters that typically include a kitchen, living area, bathroom facilities, and a lockable entrance. ADU’s can be attached or detached from the main residence.

The median cost to build an ADU is $150k to more than $350k, but price can vary widely depending on several factors … including location, whether attached or detached, size of the ADU, amenities included, the current price of building materials, and finish work desired.

If you are a homeowner, adding an ADU can mean more financial freedom and leisure.  If you rent, an ADU can be your ticket to an affordable home in a great location. That’s one of the special advantages of ADUs: Both owners and renters can benefit from ADU construction.

A 2020 Freddie Mac study found 1.4 million property listings that include an ADU.  It also reported a first-time ADU listing year-over-year growth rate of nearly nine percent. 

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What Are the Types of ADUs You Can Build?

ADU regulations vary according to location, but they are typically classified into three types:

• Detached ADUs are completely separate from the primary home
• Attached ADUs share at least one wall with the primary home
• Internal ADUs are completely enclosed by the primary home. 

Beyond these broad categories, ADU types can be further described.  For example, a basement ADU is one specific type of internal ADU, and an ADU with a garage underneath is a version of detached ADU.  In California, a homeowner on a budget can construct a Junior ADU, which must be under 500 square feet and within a single-family home structure.  Junior ADUs require a separate kitchen and entrance to the primary dwelling, but may share a bathroom with it.

What type of ADU is best for your situation, though? Let’s dive a little deeper into “What is an ADU?” to see if we can better understand why ADUs are gaining rapidly in popularity.

What Are the Benefits of ADUs?

Flexibility, functionality, and the overall joy of tiny homes contribute to the benefits of ADUs. Depending on whether you want to build an ADU or rent an ADU, though, the perspective is necessarily a bit different.

Here are some of the benefits of ADU construction for property owners:

• ADUs can provide extra income.  Building an ADU isn’t nearly as expensive as building an ordinary house — but the potential rent amount can be proportionally greater when you compare the income per square foot. ADUs tend to rent quickly and don’t require as much upkeep.
• ADUs are convenient to manage.  Given its proximity to the homeowner, an ADU is easier to manage than a separate rental property. That can enable you to bypass using a property management company, thereby maximizing your return on investment.
• ADUs make your property more valuable.  According to a study by the National Association of Realtors, most prospective homeowners are willing to pay more for a home with an ADU on the property.
• ADUs can minimize the aesthetic impact of home expansion. In neighborhoods with similarly-sized houses, adding an ADU on a less visible area of the property can be more subtle in appearance than additions to the main home.
• ADUs are a place to work.  Whether you work at home full time or part time, an ADU may be the perfect solution for creating a separate area to work. You’ll avoid interruptions and will feel more like your workspace is an office.
• ADUs can house aging parents.  For older, but still independent parents, an ADU is a great way to provide extended, affordable visits or reside permanently “next door.” In addition to saving money, you can take comfort in your parents being close and not depending on a retirement facility for their care.
• ADUs can house caretakers. A nanny or nurse living in your ADU provides safety and convenience, with the additional benefit of privacy for you and for them.
• ADUs make visits by family and friends easier. Everyone loves to have visitors, but after a few days in your house you might be ready for them to leave. With the separation and privacy of an ADU, family and friend visits can be more enjoyable for all.
• ADUs help adult children prepare to leave home. Many post-college adults have trouble meeting the financial obligations of living on their own. An ADU can enable your kids to delay these expenses and save money for when they eventually move out.

Why Are ADU Rentals Soaring in Popularity?

Younger generations often aren’t keen on the idea that they must live in a large space. Sharing, simplicity, and living on a budget that allows one to play more and work less is a growing theme among them. That shift in cultural values helps make ADUs popular with renters.

As rents skyrocket, middle-income tenants are often forced to spend a high proportion of their income to live in a desirable area. It can be difficult to find a rental that is close to amenities, provides access to great schools, and doesn’t require a long commute. ADUs can provide the best of both worlds: affordable rent in a more desirable area. 

Similarly, retired Boomers concerned with capital preservation are looking for lower cost housing options.  For them, an ADU can provide comfort, privacy, and a good location, without the stress of spending too much of their hard-earned retirement savings.

ADUs Can Also Benefit Cities, Counties, and States

Municipalities see the benefits of ADUs too. Opponents argue ADUs can crowd neighborhoods, worsen traffic congestion, stress infrastructure, and reduce property values.  However, political leaders are siding with advocates who say ADUs are a good way to increase housing stock without significantly altering a neighborhood, consuming undeveloped land, or adding new infrastructure.    

So much so that many cities across the country have relaxed regulations on ADU construction or enacted legislative changes to spur more development of them.  Others are considering such measures.  California and Oregon have already passed state-wide legislation aimed at making ADUs easier to build.

Yet another benefit for everyone is environmental stewardship. Most people today want to help the environment. For a homeowner, offering housing to others by constructing an ADU not only provides a place to live, but creates a low carbon footprint space for renters.  ADUs require fewer resources to build and maintain than full-sized homes, and use less energy to heat and cool. Civic leaders who support ADU construction are supporting pro-environment policies.

Is Constructing an ADU the Right Choice for You?

Whether you are homeowner, renter or hold a local government position, ADUs can benefit you and your community.  With many options at different budget levels, ADUs are well positioned to meet a variety of needs for individuals and communities alike. 

What is an ADU? We’ve described an ADU as “an independent residential living quarter built on the same lot as a single-family home.” That’s a fairly vanilla description that may not sound very exciting. It’s not the “What is an ADU” part of the story that grabs our attention, though … it’s the benefits of ADU construction that can make ADU construction an excellent idea.

Beyond the features and legal requirements that qualify a dwelling as an ADU, ADUs are income-producers, places to work, a way to provide autonomy for elderly parents, and conduits for young adults to gain a financial foothold before they move out on their own.  ADUs are also a way for middle income renters to share in the American dream by living in a desirable neighborhood with access to  quality schools and amenities.  Finally, ADUs can help solve the current housing crunch.  

What are ADUs?

For many people and municipalities, ADUs are an opportunity.  They offer a pathway for meeting your personal or community goals. ADUs can help solve many challenges you or your municipality are facing.

How can you get more information about ADUs? 

That’s easy: Call Central Oregon ADU’s experts at (541) 408-0637 or fill out our contact form!

Thank you to freelance writer Craig Zurovsky for his work researching and writing this article.