ADU Basics

What is an ADU and how can adding one help you earn income from your property? Accessory Dwelling Units, or ADUs, are becoming more and more popular to add space and potentially generate rental income. Navigating the decision to build one or convert an existing space can be tricky, but with this episode of Beginner to Buyer, we’ll take you through the process and what you need to do to be prepared if an ADU is the right choice for you.

Host Nadeska Alexis speaks with Keelan Sears, a new homeowner who spent time living in a converted RV while saving to buy a home and is now in the process of constructing an ADU. Keelan talks about feeling uncertain as a first-time homebuyer and how he and his partner saved money and found a good real estate agent to help them through the process. They learned about the possibility of buying a property zoned for ADUs and were convinced of the value an additional space can bring in rental income. Now that they are settled in their home, Kellan and Amy are in the thick of the ADU construction process and have practical insights into the permitting process, choosing a design firm and architect, and potentially drawing from home equity to fund the project.

Later, Nadeska is joined by ADU Specialist, Kol Peterson who represents an organization that offers training and accreditation to industry professionals. Kol explains the many types of ADU and how people traditionally use them either for extended family or as a source of rental income. He also breaks down the different types of ADU structure, from free- standing detached buildings to spaces converted within the main dwelling. Kol also breaks down a typical timeline for construction as well as typical costs in different regions of the country. Since the expense of an ADU can be considerable, Kol has insights into how people might think about paying for it— from a home equity loan to a personal line of credit— and how to determine whether potential rental income is sufficient to make additional loans prudent.

If you’re thinking about an ADU conversion or construction for your property, this episode is a must-listen.

You can read the full transcript on the Chase Website