Some people call them backyard cottages.
Others call them in-law suites or even granny flats.
Theyre accessory dwelling units, also called ADUs, and theyre rapidly growing in popularity everywhere theyre allowed.
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Others build ADUs for extra space or to rent them out either on a monthly basis or as Airbnbs.
Its a lot more than just a shed.
A typical accessory dwelling unit contains a living space, a kitchenette and a bathroom.
It has electricity, plumbing, heating and air conditioning.
Depending on their size ADUs max out at about 1,000 square feet some have a separate bedroom.
Smaller ones have a foldout bed in the living room.
Where Are ADUs Allowed?
The biggest hot spot is California, which has basically legalized ADUs statewide.
All of these places report increasing numbers of ADUs being built.
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Theyve realized ADUs are a gentler way to add density than duplexes or apartment complexes, he added.
How Much Do ADUs Cost?
Well, theyre not cheap.
To build an ADU is to build a small house, Nova said.
It makes the whole property more valuable.
In other words, the increase in the homes resale value is more than what the ADU cost.
Do People Really Rent Out ADUs?
Brian and Jackie Jump in Scottsdale, Arizona, got their first ADU because they needed the extra space.
We didnt have anywhere to work out.
We didnt have anywhere to host my husbands parents when they visited, Jackie Jump said.
For them to have their own little house on the same property was just amazing.
To help pay off the loan for the ADU, they startedrenting it out as an Airbnb.
We figured if we got even a handful of bookings, that pays for the ADU right there.
Now the Jumps rent out two homes that have ADUs.
When youre renting the property, the house and the ADU come together, Jackie Jump said.
It becomes a really alluring thing for families to rent and stay in.
How Do You Build an ADU?
The first step is to get financing, typically through a home equity line of credit.
Financing the project is one of the major hurdles, Nova said.
But its usually possible if youre willing to jump through the hoops.
Depending on where you live, that can take one to nine months, he said.
Manufacturers often partner with local contractors to make that happen.
People use their backyard cottages for all kinds of purposes.
For some people, its just a dedicated rental unit.
Its a home improvement project that can generate cash for the homeowner as well, Nova said.
Other people use it for guest space or to house their aging parents.
Its a great option that can keep families together.
Are There Cheaper Options?
Competitors likeSummerwood Productshave a wider price range, from about $15,000 to $40,000.
With no plumbing, these arent residences, though.
Grandma cant stay there.
Theyre simply offices or studios or workout spaces.
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Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder.
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