An ADU, or Accessory Dwelling Unit, is a secondary housing unit on a single-family residential lot. It is a small outbuilding that can be used as a separate living space, with its own kitchen, living area, and separate entrance. ADUs can be attached to the main house, built above a garage or workshop, or be a stand-alone unit in the backyard. They are also known as granny flats, backyard cottages, mother-in-law suites, or in-law apartments. ADUs are significantly smaller than the average US house, and they tend to be one of two units owned by one owner on a single-family residential lot.

ADUs can be used for a variety of purposes, such as a rental unit, a home office, a yoga studio, or an extra bedroom. They are a great housing choice for aging parents, adult children, or as a source of rental income for homeowners. ADUs can also help diversify the rental/housing stock in a neighborhood while generating income for the homeowner. They are a popular alternative in high-demand areas where affordable housing is scarce.

ADUs are subject to municipal land use and zoning regulations, which can differentiate ADU types and styles and dramatically affect their allowed uses. Homeowners should check their local government for more information, particularly if they plan to build an ADU for Airbnb-type rentals. Constructing an ADU could increase a homeowner’s tax bill, possibly eliminating a significant amount of the profit.