A secondary house or apartment that shares the building lot of a larger primary home is called an Accessory Dwelling Unit (ADU) in legal and regulatory terms.
Even though the unit cannot be bought or sold separately, they are often used to provide additional income through rent or to house a family member.
For instance, an elderly parent could live in a small unit and avoid having to move to a senior care facility.
AD or Accessory Dwelling Units is also called a secondary dwelling unit, in-law unit, carriage house, or granny flat.
These units have their separate entrance, their own kitchen, and living area. An ADU might be connected to the house or garage, or it can be built as a stand-alone unit, but the water and energy connections of the primary house are used in general.
After World War II, most residential areas in America were zoned to set limits on population density and the size and separation of single-family dwellings because of the housing boom.
Recently, in many areas around the country, there have been zoning changes allowing the addition of ADUs.
There are limitations set by the zoning laws on the size and style of any new unit and it is mandatory for the owner to live on the property.
Some people use ADUs as a means to house family members, but many others use them for rental income.
If it is a wise investment or not depends on various factors, like local zoning ordinances, maintenance costs, upfront costs, possible tax consequences, and activity in the rental and housing market and also depends from one landlord to another.
A homeowner intending to build an ADU should first confirm if it is lawful on their property.
If a homeowner has to refinance the property then by building an unlawful ADU they will face issues.
A possible code enforcement action resulting in fines could be a result of building an unauthorized ADU. So before engaging in any building owners should look to their zoning ordinances and ideally consult with a legal specialist.
There are various other factors to consider while building an ADU, the cost would vary depending on whether the ADU will be attached or detached from the main home?
What renovations are needed, and does the homeowner need to seek professional services from construction contractors, engineers, or surveyors?
The ideal way of financing an ADU depends on the owner’s individual situation. They can take out a renovation loan, refinance if the homeowner has equity in their home, or pull from available cash on hand.
A homeowner’s tax bill could increase with the construction of an ADU, so it would eliminate a significant amount of the profit.
The housing and rental market varies from one state to another and from one city to another.
An ADU is an extra residential building that resides in the same lot as a primary residence.
A guest house or a detached garage with a rented apartment above is all examples of an ADU.
Depending on the area one lives the establishment and use of an ADU will fall under different zoning rules and regulations.
Additional income in the form of rent can be got with an ADU. An ADU will increase monthly utility bills and will cost money to build and maintain.