Author name: Amelia Vance

In the past five years, the number of permits issued for accessory dwelling units (ADUs) has more than doubled in many U.S. cities, which is a clear reflection of how these compact, flexible homes are reshaping modern residential living.

As zoning laws evolve and housing costs rise, more homeowners are looking to ADUs as a smart, sustainable solution for adding space, generating income, or accommodating family, all without moving or building a full-scale addition.

As a licensed architect and contributor here at Last Pals Architecture, I’ve helped dozens of homeowners navigate the process of building an ADU, from concept to final inspection.

Whether you’re dreaming of a backyard cottage, a converted garage, or a private apartment for your parents, understanding the steps involved is essential to making your project a success.

In this guide, we’ll break down everything you need to know about how to build an ADU, including:

• What is an ADU building? A simple explanation of ADUs and the different types available.

• Why build an ADU? Explore financial, practical, and lifestyle benefits.

• Steps to building an ADU? From zoning checks to design, permits, and construction phases.

• How much does it cost to build an ADU? A breakdown of average costs and what influences them.

• How long does it take to build an ADU? A realistic timeline and what can speed up or slow down the process.

By the end of this article, you’ll not only understand what an ADU is you’ll have a clear roadmap for planning, designing, and building one on your property. Let’s get started on making your ADU vision a reality.

What Is an ADU Building?

An accessory dwelling unit, or ADU, is a self-contained residential unit located on the same lot as a single-family home.

It includes all the essentials of a standalone residence, such as a kitchen, bathroom, sleeping area and private entrance, but it’s legally tied to the primary property. That means it can’t be sold separately, even though it functions independently.

ADUs are a smart way to add living space without the cost and complexity of a full home addition. Whether you’re building an ADU to house a family member, rent it for extra income or simply create more flexible space, it’s important to understand the different types available.

Types of ADUs

• Detached ADU: A free-standing structure, like a backyard cottage or tiny home, built separately from the main house.

• Attached ADU: Built as an addition to the main home, often sharing one wall but with its own separate entrance and amenities.

• Garage Conversion: An existing garage is transformed into a livable space, often retaining the original footprint.

• Interior Conversion: A section of the existing home, such as a basement, attic, or unused wing, is redesigned as an independent unit.

Each type has pros and cons. Detached units offer the most privacy, while conversions are often more economical because they use existing structures.

Legal Definition and Ownership Rules

Legally, an ADU is part of the same parcel as the main home. This means:

• You can’t sell an ADU separately from the main house.

• It must comply with local zoning and building codes.

• It shares utility connections with the main residence unless separated during construction.

These factors influence how you plan, finance, and use the ADU. For example, financing options may depend on your home equity, and rental income from the ADU must be reported for tax purposes. At Last Pals Architecture, we always recommend working with a licensed professional to navigate these legal nuances.

Why Build an ADU?

The reasons to build an ADU are as diverse as the homeowners who pursue them. From financial incentives to family needs, ADUs offer a flexible solution to modern housing challenges.

Rental Income and Affordability

One of the most popular reasons for building an ADU is to generate passive rental income. In high-demand housing markets, ADUs can be rented out long-term or as short-term vacation units, helping offset mortgage payments or supplement retirement income.

At the same time, they contribute to housing affordability by increasing rental supply without requiring new large-scale developments.

Multigenerational Living

ADUs are ideal for families who want to live close but not too close. Whether it’s aging parents, adult children, or extended relatives, an ADU provides the perfect balance of proximity and privacy. Many of our clients at Last Pals Architecture choose features like wider doorways and single-level layouts to support aging in place.

Efficient Land Use

Rather than expanding outward with new developments, ADUs make better use of already-zoned residential lots. They integrate into existing neighborhoods, using existing infrastructure like roads and utilities, which helps communities grow sustainably.

Key Regulations and Planning Considerations

Zoning, Setbacks, and Size Limits

Most municipalities have specific rules for:

• Minimum and maximum size: Typically between 500 and 1,200 square feet. Some cities cap it at 50% of the primary dwelling’s size.

• Setbacks: Requirements to keep the structure a certain distance from property lines, often 3 to 5 feet for side and rear setbacks.

• Height limits: Usually between 16 and 22 feet. Taller ADUs may require increased setbacks or additional approvals.

Design and Privacy Regulations

Cities often have design standards to protect neighborhood character. These may include:

• Obscured or frosted windows on sides facing neighboring homes

• Private entrances located away from adjacent homes

• Landscaping requirements to maintain visual buffers

Lot Coverage and Density Limits

Zoning codes often limit how much of your lot can be covered by buildings. On most single-family lots, you’re allowed one detached and one attached ADU, but this varies by jurisdiction. Multifamily lots may have more flexibility.

Steps To Building an ADU

Step 1: Assess Feasibility

Before anything else, verify that your property is eligible for an ADU. This includes:

• Checking zoning laws and density limits

• Measuring lot size and existing structure coverage

• Evaluating access to utilities

Hiring a professional for a feasibility study can save you time and costly surprises down the road.

Step 2: Design Planning

Once feasibility is confirmed, the design phase begins. You’ll need:

• Architectural plans that meet local codes and Title 24 energy standards (or local equivalent)

• Decisions about layout, size, accessibility, and aesthetics

• To choose between custom designs or pre-approved plans offered by some cities

Step 3: Permitting Process

You’ll need to submit plans to your local building department for approval. This includes:

• Building permits

• Electrical, mechanical, and plumbing permits

• Fire and energy compliance documentation

Some cities now offer expedited ADU permitting to encourage development.

Step 4: Site Preparation and Foundation

Preparing the site includes:

• Clearing vegetation and debris

• Soil testing and grading

• Pouring a code-compliant foundation

Step 5: Structural Construction

This phase includes:

• Framing walls, roof, and floors

• Installing sheathing, doors, and windows

• Ensuring all work meets structural and safety codes

Step 6: MEP Systems Installation

Mechanical, Electrical, and Plumbing (MEP) systems are installed, including:

• HVAC systems for heating and cooling

• Electrical wiring and panel upgrades

• Water and sewer connections

Energy efficiency is key, as insulation and system choices must meet local codes.

Step 7: Interior and Exterior Finishes

Once systems are in, it’s time for finishes:

• Drywall and paint

• Flooring and cabinetry

• Appliances, fixtures, and exterior siding

Step 8: Inspection and Approval

Multiple inspections will occur throughout the build. Final inspection ensures:

• Code compliance

• Safety systems (e.g., smoke detectors, egress)

• Readiness for occupancy

Once approved, you’ll receive a certificate of occupancy.

How Much Does It Cost To Build an ADU?

Cost Ranges and Variables

The cost to build an ADU varies widely based on size, type, and location. On average:

• Detached ADUs: $300–$400 per square foot

• Garage Conversions or Interior Units: $150–$250 per square foot

Total project costs typically range from $100,000 to $300,000 or more. Factors that influence cost include:

• Design complexity

• Material selections

• Utility upgrades

• Local labor rates

Financing Options

Homeowners often fund ADUs through:

• Home equity loans or lines of credit (HELOC)

• Cash-out refinancing

• Construction loans

• Local ADU financing programs, where available

How Long Does It Take To Build an ADU?

Timeline Breakdown by Phase

While timelines vary, a typical ADU project takes 6 to 12 months from start to finish:

• Feasibility & Design: 1-2 months

• Permitting: 1-3 months

• Construction: 4-6 months

• Inspections & Final Approval: 1 month

Factors That Affect Timing

• Permit processing times in your city

• Weather delays

• Contractor availability

• Project complexity and scope

Legal, Utility, and Tax Considerations

Utility Connections

ADUs typically connect to the main home’s:

• Water and sewer lines

• Gas and electric systems

In some cases, utilities need to be upgraded to handle the added load, especially with HVAC or separate metering.

Legal and Tax Implications

• Rental income must be reported to the IRS

• Your property may be reassessed, potentially increasing property taxes

• Insurance policies should be updated to cover the ADU

Regional Differences in ADU Rules

• California: Offers some of the most ADU-friendly laws, including reduced parking requirements and streamlined permitting.

• Colorado: ADU rules are set at the municipal level, so homeowners must check local ordinances.

• Maine: Recent legislation encourages flexible ADU development to address rural housing shortages.

• North Carolina: Slowly expanding ADU allowances, especially in urban centers like Raleigh and Charlotte.

Closing Thoughts

Building an ADU is a smart, future-forward investment that enhances your property’s value and functionality. Whether you’re looking to generate rental income, create housing for a family member, or make better use of your land, understanding how to build an ADU is the first step toward achieving your goals.

From assessing feasibility and navigating local zoning codes to final inspections and legal considerations, each phase requires careful planning and professional insight. Working with experienced professionals can make all the difference.

Sources:

What Is the Process for Getting an ADU Permit? – LegalClarity

Want to Add a Granny Flat or Rental ADU? Here’s How to Finance It – NerdWallet

ADU Tax Deductions: What Homeowners Need to Know – Accounting Insights