What You Need to Know About Accessory Dwelling Units

 

ADU-A flexible housing solution that adds value, creates income, and supports multigenerational living

In recent years, Accessory Dwelling Units—also known as ADUs, granny flats, casitas, or backyard homes—have grown in popularity across the United States. Whether you're looking to house aging parents, generate passive income, or increase your property’s value, an ADU might be the smartest move you can make.

What is an ADU?

An ADU is a secondary housing unit located on the same lot as a primary residence. It can be attached (like a basement or garage conversion) or detached (a stand-alone structure in the backyard). These units are fully independent, with their own kitchen, bathroom, and living space.

Why Are ADUs So Popular?

1. Affordability & Flexibility
   ADUs provide a more affordable option than purchasing a new property. Homeowners can house extended family, create a private workspace, or downsize into the ADU and rent out their main home.

2. Rental Income
   ADUs are a smart way to generate consistent rental income. With high housing demand in many cities, well-designed ADUs can command strong rental rates—especially in urban or coastal areas.

3. Property Value Boost
   Adding an ADU often increases the overall market value of your home. Buyers appreciate the flexibility and income potential that comes with a permitted, finished secondary unit.

4. Multigenerational Living
   More families are seeking ways to live close while maintaining privacy. An ADU allows adult children, in-laws, or elderly parents to live nearby without sacrificing independence.

Things to Consider Before You Build

• Local Zoning Laws
  Regulations vary by city and state. Some areas have embraced ADUs to ease housing shortages, while others still have restrictive zoning, height, or parking rules.

• Financing Options
  There are several ways to finance an ADU: home equity loans, cash-out refinances, renovation loans, or specialized construction loans. Some programs may even consider the future rental income from the ADU in your loan qualification.

• Design and Build
  Choose between prefab or custom-built ADUs depending on your budget and timeline. Be sure to work with licensed professionals familiar with local ADU code requirements.

• Utilities and Permits
  Permitting is key. Also consider how the ADU will connect to water, sewer, and electrical systems, and whether you'll need upgrades to your main home's infrastructure.

Is an ADU Right for You?

ADUs are ideal for:

• Homeowners looking to invest in their property

• Families with changing needs

• Real estate investors seeking cash flow opportunities

• Aging homeowners looking to "age in place" while generating income

Whether you're thinking about building one in your backyard or buying a property that already has one, ADUs offer incredible flexibility. With the right strategy, they can be a long-term solution that meets lifestyle and financial goals alike.

Need help financing your ADU or learning more about the benefits?
Reach out to the team at Park Place Collective Group. We offer innovative mortgage and financing solutions designed to help you unlock your property's full potential. 

Joe Costa and The Park Place Collective Group

402 West Broadway, Suite 400

San Diego, CA 92101

619-990-7552

www.parkplacecollective.com