Is an Accessory Dwelling Unit the Right Choice for You? Key Insights to Consider

Finding an affordable home can be challenging in today’s market. Or maybe you already own a home but could use extra income or a private space for aging parents. In either case, an Accessory Dwelling Unit (ADU) could be the perfect solution.

What Is an ADU?

According to Fannie Mae, an ADU is a self-contained living space located on the same lot as a single-family home. It must have its own living, sleeping, cooking, and bathroom facilities separate from the main house. ADUs can come in various forms, including:

• A basement apartment within the main home
• A unit attached to the home, like a space above a garage
• A completely detached structure, even a manufactured home

Why ADUs Are Gaining Popularity

More homeowners are recognizing the value of ADUs, and buyers are taking notice. In fact, a recent survey found that 24% of real estate agents say ADUs—like mother-in-law suites—are among the most sought-after features in today’s market.

It’s easy to see why ADUs are becoming more popular. With rising living costs, having an ADU can provide extra income and help ease financial stress. Whether you purchase a home with one already in place or add one yourself, renting out the space can help offset your mortgage payments.

Here are some of the top benefits of ADUs, according to Freddie Mac and the AARP:

• Close, Yet Independent Living: ADUs offer the perfect balance—more quality time with loved ones while maintaining privacy. If that sounds ideal, it may be worth considering a home with an ADU or adding one to your property.
• Aging in Place: ADUs allow aging family members to live nearby while maintaining independence. If your parents need support but still want their own space, an ADU could be a great solution.
• Built-In Childcare: If family members live in the ADU, they may be able to help with childcare—saving on costs while giving kids more time with their grandparents.

Keep in mind that an ADU is typically considered a secondary dwelling on a single-family lot, meaning it usually can’t be sold separately from the main home. However, regulations are changing in some states, so check with a local real estate expert for the latest updates in your area.

Bottom Line

In today’s housing market, purchasing a home with an ADU or adding one to your property could be a smart investment. However, it’s important to consult with a real estate expert who can guide you through local regulations and help you find the best options in your area.

What’s your main reason for considering an ADU?