Struggling to find a home that fits your budget? Or perhaps you already own a place but need a bit of extra income or space for aging family members. Accessory dwelling units (ADUs) might just be the perfect solution for you in today's market.

What is an Accessory Dwelling Unit (ADU)?

Fannie Mae defines an accessory dwelling unit (ADU) as a small living area that's located on the same lot as a single-family home. It needs to have its own separate spaces for living, sleeping, cooking, and bathrooms, independent from the main house. ADUs can come in various forms, including:

  • Inside the main house, like a basement apartment.

  • Connected to the main house, such as an apartment above the garage.

  • Completely separate from the house, which could even be a manufactured home.

Advantages of Accessory Dwelling Units (ADUs)

ADUs are becoming increasingly popular as more people realize their practicality. A recent survey revealed that 24% of agents consider an ADU, like a mother-in-law suite, to be one of the top features buyers are currently seeking.

The increasing popularity of ADUs is understandable. As costs continue to rise, these units can provide a way to boost your income and alleviate some financial pressure. Whether you purchase a home that already includes an ADU or decide to add one, having that extra space gives you the flexibility to rent it out and contribute towards your mortgage payments.

Some additional key advantages of ADUs include insights from Freddie Mac and the AARP:

  • Close, But With Space – ADUs let you stay near family while still having your own privacy. It’s the best of both worlds—more quality time together without feeling crowded. If that sounds appealing, finding a home with an ADU or adding one might be a great idea.

  • Aging in Place, With Support – ADUs are perfect for older family members who want to keep their independence while having loved ones close by for support. If your parents are getting older and you want them nearby without sacrificing personal space, an ADU could be the perfect solution.

  • Built-In Childcare – If grandparents or other family members live in the ADU, they might be able to help with childcare. That means potential savings on daycare and more bonding time for your kids with their grandparents—a win-win!

Since an ADU is usually a secondary dwelling on a single-family lot, it generally can't be sold independently from the main house. Although some states are changing this, the rules can differ depending on where you are. It's a good idea to reach out to a local real estate expert to get the latest information on the regulations in your area.

Bottom Line

In the current market, it might be a good idea to think about purchasing a home with an ADU, or adding one to your existing property. Make sure to consult with a real estate agent who can clarify local codes and regulations regarding this type of housing, as well as what options are available in your area.

What inspires you to look into ADUs?