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  • Writer's picturePeter Seroter

Maximizing Your Property's Value: The Rise of Accessory Dwelling Units (ADUs)


If you're a homeowner contemplating ways to boost your property's value or exploring opportunities for additional income, you might be intrigued by the concept of Accessory Dwelling Units (ADUs). So, what exactly is an ADU?


What Is an ADU?

An Accessory Dwelling Unit is a smaller secondary residential dwelling located on the same lot as a larger single-family home. These units are versatile, serving various purposes such as home offices, studios, rental units, or even guest suites. Unlike separate properties, ADUs are legally considered attached to the existing lot.


The Many Faces of ADUs: Attached, Detached, and Internal

ADUs come in diverse physical forms, but they are self-contained units typically featuring a bathroom, kitchen, bedroom, and living area. Whether attached as extensions or constructed as stand-alone backyard cottages, ADUs offer homeowners flexibility in enhancing their living space.


1. Attached or Addition ADUs: Also known as bump-out units, these extensions connect to the main house or convert existing attached spaces, such as garages. The average cost for a new addition ranges from $40,000 to $125,000.


2. Detached New Construction ADU: Backyard cottages or granny flats, these stand-alone units offer the most privacy. Constructed anew or converted from garages, these units cost upwards of $100,000 on average.


Benefits of ADUs

Whether attached, detached, or internal, ADU housing brings numerous advantages to homeowners and neighborhoods:


- Affordability: ADUs offer more affordable housing options in single-family neighborhoods.

- Environmental Impact: Smaller ADUs require fewer resources to build and consume less energy.

- Income Source: Homeowners can generate supplemental income by renting out ADUs.

- Multi-generational Living: ADUs provide an alternative to assisted living facilities for senior family members.

- Property Value Increase: Adding an ADU to the primary lot can increase the property's value by up to 30%.





In September 2023, the Phoenix City Council approved new rules allowing one ADU in all single-family residential properties, opening doors wider to these versatile structures. ADUs, also known as in-law suites, granny flats, casitas, and cottages, create additional living spaces at a cost significantly lower than traditional renovations. These structures serve as onsite rental properties or private living quarters, contributing to the cultural and economic vitality of communities.


Federal Support for ADUs

The Federal Housing Administration (FHA) has expanded access to mortgage financing for homes with or planning to include ADUs. This new policy reinforces the Biden-Harris Administration's goals of increasing housing supply and homeownership opportunities.


Conclusion

As the housing landscape evolves, ADUs emerge as a powerful tool for homeowners seeking to enhance their property's value and functionality. Whether you're considering an addition or a stand-alone structure, ADUs offer a myriad of benefits. Phoenix's recent embrace and federal support further underscore the growing importance of these innovative living spaces.


Ready to explore the potential of ADUs for your home? Contact me for personalized guidance on integrating ADUs into your homeownership journey.


Peter Seroter

NMLS 997692



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