An accessory dwelling unit or “ADU” is is a smaller secondary residential dwelling located on the same lot as a larger single-family home. They are often built to function as an office or studio, a rental unit or as an extra guest suite.

ADU offers homeowners a multitude of benefits, including the potential for additional rental income, increased property value, and flexible living space. ADUs can serve as guest houses, home offices, or independent living spaces for family members, making them perfect for multi-generational households.

You must follow local zoning laws and building codes - obtaining permits from the local planning and building departments. The property must meet specific requirements regarding setbacks, height, parking, and utility connections. Consulting with professionals who understand local policies can streamline the process and ensure compliance with all legal requirements.

Adding a ADU to your property can affect your insurance policies in a few ways. Your homeowners insurance may increase since you are effectively adding another dwelling to your property. You will also want to make sure that your ADU is properly insured against things like fire, theft, and liability. You may be able to add it to your existing policy or get a separate policy for it.

An ADU in California needs a minimum of 150 square feet of space to be built. This is typically about the size of a small bedroom or studio apartment. Local governments can set minimum and maximum unit sizes for both attached and detached ADUs trough an ordinance. The maximum unit size is at least 850 square feet, and ADUs with more than one bedroom must be at least of 1,000 square feet.

While the actual construction of an ADU may take as little as 3 to 4 months, the full process—from design and permitting to final inspections and adjustments—can range from 8 months to 1 year. The timeline will largely depend on factors such as site complexity, local permitting processes, design choices, and unforeseen delays. Working with an experienced team that is familiar with local regulations and the ADU process can help streamline the timeline and reduce potential setbacks.

The most recommended use of an ADU is renting it out, as it offers significant financial benefits. By renting your ADU, you can create a steady stream of rental income that helps offset mortgage payments, property taxes, or maintenance costs. Renting also allows you to capitalize on the increasing demand for affordable housing, providing tenants with a private, independent living space while increasing the value of your property. Additionally, renting out an ADU can offer long-term financial stability, helping to fund retirement, college tuition, or even supporting future real estate investments.

Many cities are strongly supportive of ADU construction because they help address two major issues: the affordable housing crisis and the shortage of available rental properties. ADUs provide additional housing units that are often more affordable than traditional single-family homes, making them an ideal solution for cities looking to increase their housing stock without requiring large-scale developments. Additionally, ADUs are an effective way to increase rental options in high-demand areas, benefiting both homeowners and tenants. With local governments increasingly incentivizing ADU development, this makes it a timely and financially advantageous investment for homeowners.