ADU is short for accessory dwelling unit — an old concept enjoying a renaissance of sorts today. Basically, ADUs are apartments or small houses on the same parcel of land as the primary dwelling offering independent living for their occupants.

An ADU can be attached or detached from the main house. It can be a backyard cottage, a basement studio, or a retrofitted garage. Some folks call them granny shacks or mother-in-law apartments because many ADUs are built to house family members, not strangers looking to rent. But ADUs can no doubt be handy for homeowners seeking rental income, as well. And they also have broader societal benefits, too.

Why Accessory Dwelling Units Are Becoming More Popular

WTF Is an Accessory Dwelling Unit (ADU)? Want to host guests or renters, but don't have room in your house? Learn what an accessory dwelling unit (or ADU) is and how it can help.  #makemoney #makemoneyfast #personalfinance #realestate #investmentLife is getting more expensive for most of us.

Housing costs are getting out of control and beyond the reach of many Americans, especially millennials.

The cost of taking care of elderly parents and other relatives is escalating, as well. And amid this financial squeeze that seems to grow tighter every year, many homeowners are so hard up for cash they have no choice but to become landlords.

Aside from generating rental income, what’s really driving ADUs is a renewed sense that families must help each other in creative ways to better their quality of life. ADUs are also about getting the most value out of your property’s potential.

What Differentiates an ADU From a Regular Rental?

Some could say the term accessory dwelling unit is a just fancy way to describe rental apartments. Yes and no.

What makes ADUs different from a typical rental unit is that an ADU structure has its own independent infrastructure systems separate from the main house, such as plumbing, sanitation, and electrical and gas lines. And ADUs are fully equipped with their own kitchens and bathrooms. If your rental shares the same lines as the main house, that isn’t an ADU in the purest sense.

Another thing to keep in mind: An ADU is an adjunct to the main house. It can never be sold as a separate piece of property.

How Do ADUs Work?

Let’s say your son and his new wife can’t afford to buy a home near you. Why not build a stand-alone ADU in the backyard at a fraction of the cost to purchase a standard single-family home?

The newlyweds’ ADU would provide them not only huge savings, but also privacy and independence.

Or you can do the reverse. Have the kids move into the main house and build an ADU for Mom and Dad, who want to downsize. Such arrangements can provide everyone some peace of mind knowing that family is close by.

That peace of mind explains why many homeowners have been building ADUs for aging parents for years in their backyards, basements, and garages. ADUs offer a convenient, money-saving alternative to super-expensive senior housing or nursing-care facilities. And high costs aren’t the only negative nursing homes carry — these places can be dreadful and sickening.

Other benefits are obvious: You can keep an eye on Mom and be close by when she needs you. On average, it costs anywhere from $70,000 to $100,000 to build an ADU, although prices can be much higher for high-end units. Think also of an ADU as an investment to boost your home’s value.

Community Benefits of ADUs

ADUs are quite popular on the West Coast in places like the San Francisco Bay Area and Portland, where affordable housing (single-family homes and rentals) is scarce and real estate tends to be expensive.

What’s driving this crisis isn’t necessarily greed, but a lack of new land to develop. So why not use the old land in your backyard to build a small cottage that could be used by a student, a young professional, or your prodigal son who has returned home from a two-year skiing bender?

Now imagine if qualified homeowners did this on a larger scale. Think of the environmental effects — ADUs could help reduce urban sprawl by filling in underutilized old land and concentrating housing in certain neighbors near job and transportation centers. That would mean shorter commutes and less motor vehicle usage (and tailpipe emissions).

Lastly, ADUs seem like a more aesthetically pleasing, low-profile alternative to large apartment buildings. Plus, eco-friendly ADUs use a lot less energy (low utility bills) than those large apartment complexes.

Potential Disadvantages of ADUs

ADUs have their critics. But the criticism seems leveled at homeowners who build them simply to be rentals and then neglect to mind how their new landlord endeavors affect their neighbors and the wider community.

Some critics fret that a proliferation of ADUs in typical residential neighborhoods could increase traffic and rob homeowners of valuable parking space.

Others fear that residential neighborhoods could turn into zombie rental zones where tenants can’t be bothered with things like upkeep.

Probably the most disturbing yet familiar age-old criticism is how ADU rentals could depress home values in the neighborhood — should those renters be low-income families on government assistance.

How to Get Started on Your ADU

Check your local and state zoning laws to see if they even allow ADUs, and if so, how many miles of red tape you might have to navigate. Some cities are very supportive of ADUs, as they help with affordable housing options. Others aren’t. The laws vary widely. Portland probably has the least restrictive ADU laws. In fact, the property owner doesn’t even have to live on his property and can build an ADU up to 800 square feet (much bigger than average).

Some cities allow a new addition to an existing house, but not standalone structures. Others might approve ADUs only if they’re on large lots, which disqualify homeowners with small properties. To get the skinny on your local and state zoning laws and regulations, go to AccessoryDwellings.org for a simple breakdown.

In most cases, you’ll need to get building permits for construction, electricity, plumbing, heating, ventilation, air-conditioning, and water. It’s a pain. Expect to pay thousands of dollars for permits as well as other fees, like sewer and parking fees.

You can design your ADU on your own if you want to. However, it’s advisable to hire a design professional who can ensure your unit will be up to code. That, too, will cost several thousand dollars.

Lastly, don’t forget about insurance. Ask your home insurance provider if your ADU is covered under your existing policy. If not, you’ll have to take out a new policy on the ADU.

Final Thoughts: Why ADUs Make So Much Sense

On a macro level, ADUs could be a big part of the solution to provide more affordable housing in an environmentally friendly way. Any real estate initiative, small or big, that can improve and strengthen communities should be encouraged and championed. But the whole idea behind ADUs seems more personal.

Some folks build ADUs to tap into their inner entrepreneurial spirits by playing part-time landlord, whether they need the rental income or not. Above all, the real value of ADUs is that people build them out of necessity, not opportunity, to help family members troubleshoot the stress, anxiety, and restrictions of our expensive, money-mad society.