ADU as Side Income

Accessory Dwelling Units (ADUs) are an excellent way to add extra space to your home. While some might use the additional space for a home office, guest bedroom, or family room, you can also reap passive income from the added space.

Discover how you can maximize the possibilities of your ADU to prosper from the additional living space.

A Guide to ADUs

ADUs come in a variety of forms, offering additional living space that is sustainable as a mini-unit.

From basement ADUs to detached ADUs to garage conversion ADUs and attached ADUs, this economic living space is all the rage for California residents living in coveted area codes.

Known as a “granny pad,” ADUs provide compartmentalized living space that can be rented out independently from the main property, creating the perfect opportunity to reap monthly passive income.

granny pad

Though ADUs share a lot with the primary dwelling, they can not be sold independently from it. However, both the ADU and primary dwelling can be rented by the owner if desired. Only one ADU is allowed per residential single-family lot, to offer extra living space without cluttering neighborhoods.

Though compact and subject to size restrictions, ADUs offer mandated living and kitchen space, as well as a bathroom to make them fully-functioning and self-contained living units. In short, they can be viewed as smaller and more affordable forms of housing that are the perfect living solution for many different lifestyles.

ADU Demand

The “granny pad” living concept is surging in popularity because of the unique living opportunities it creates. Many people, whether at retirement age or just starting their professional lives, wish to stay in certain communities and area codes.

However, they do not have the funds for an ample living space or they simply don’t want the upkeep of owning a property. Enter ADUs. These compact and affordable living spaces are the modern solution for staying in coveted, walkable neighborhoods and reaping local benefits without paying exponential prices.

With a national decrease in having children and an upswing in retirement-aged people, ADUs provide an affordable solution to remaining in your neighborhood even when the income stops pouring in.

For this reason, ADUs are very popular among retirement-aged people. At the same time, these affordable living spaces can also offer residence in coveted areas for young professionals wishing to reap the benefits of prime living locations without breaking the bank.

Overall, people choose to build ADUs for a variety of reasons, with this flexible housing option able to satisfy a variety of housing demands.

ADU Advantages

ADUs respond to national housing needs by reimagining affordable and flexible housing options. ADUs are rapidly increasing in popularity in part due to the wide variety of functions they serve.

ADUs offer a guest room that can provide space for housing a sick or in need loved one, as well as housing for visiting relatives and friends. This added living space can provide emotional security from knowing someone is living nearby, as well as financial security due to increased property value.

ADUs also offer the opportunity for caregiver housing, as well as the option for passive income from tenant rent. Additionally, you can use your converted space for a family room, game room, home office, or any room that suits your needs. Adding to their value, ADUs are praised for being environmentally friendly and easy to integrate into existing neighborhoods.

What can ADUs be used for?

  • Living space for loved ones
  • Guest room for visiting family and friends
  • Increased property value
  • Caregiver housing
  • Passive income from tenant rent
  • Family or game room
  • Home office space
  • A combination of needs

Related: ADU Garage Conversion Permit 

garage before adu

ADU Infrastructure

ADUs go by many names and come in several different forms. These small homes are known as granny pads, coach houses, carriage houses, back houses, sidekicks, secondary dwelling units, and more.

For a more cost effective project, ADUs can be converted from existing infrastructure.

ADU garage conversions are extremely popular, especially for properties with stand-alone garages.

These types of ADUs offer more privacy and less cost to build. You can also construct detached ADUs from the ground up to create your ideal living space.

Another more cost effective option is the attached ADU, though this choice does sacrifice some privacy as parts of the existing home are often converted into a self-contained living area. Internal ADUs can be created out of converted attics, basements, or areas of the home that have been partitioned off to meet ADU requirements.

Overall, which type of ADU you choose to build depends on several personal factors such as the project budget, what the ADU will be used for, and the existing infrastructure you have.

Keep in mind that due to the passive income that many ADU owners reap through renting, many ADU projects can pay themselves off over time. Additionally, the elevated property value that having an ADU adds can also help to offset initial cost concerns.

Community Value

Since they are often constructed from existing infrastructure, such as basements or garages, the cost of building an ADU on your property may be more affordable than you might think. Zoning and housing laws have eased up exponentially in the last few years to make building and renting an ADU easier than ever for California homeowners.

This environmentally-friendly form of housing is welcomed by many neighborhoods, as it creates additional living space while offering minimal neighborhood disruption. Many people are on the lookout for affordable housing, and ADUs meet this need while seamlessly integrating into the main residence’s lot.

Since ADUs are constructed on lots that the primary homeowner already owns, homeowners do not have to purchase an extra lot to make passive income through renting. This means that ADUs can offer income to help offset the cost of the homeowner’s living while creating new living opportunities for others.

Overall, ADUs are praised for meeting changing individual housing needs and providing options for empty nesters to relocate without leaving behind beloved neighborhoods. They also help to accommodate young people starting their careers and expanding families who need more local living space.

Who Can Benefit from an ADU?

ADUs appeal to a wide variety of people. Empty nesters can move into their ADUs and rent out their house for affordable living and easy house care. ADU space can be used as a guest room to house visiting family and friends, caregivers, au pairs, and more. Sick relatives can use the space to be close to, yet comfortably separate from, their loved ones in their time of need.

ADUs can serve as family space or be used as an at-home office to help facilitate remote careers. Overall, this flexible form of housing can be used to bring in passive income or house a variety of different needs.

Because of the added property value that ADUs provide, they can help homeowners on the quest to achieving financial independence.

Related: Types of ADU in Los Angeles

Are you a Los Angeles area homeowner interested in building an ADU on your property?

Are you ready to experience the variety of benefits that ADUs can offer Southern California homeowners?

Call California Foundation Works today to get started on your ADU project. From standalone structures to converted garages, California Foundation Works is your one-stop-shop for all greater Los Angeles area ADUs!

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