Why You Should Consider Adding an Accessory Dwelling Unit to Your Property: A Closer Look at the Benefits

ADU in San Diego

In today's changing housing market, many homeowners are looking for smart ways to maximize their property. One effective solution is the accessory dwelling unit (ADU). Adding an ADU can increase living space, provide financial benefits, and enhance community connections. Let's explore what an ADU is, its advantages, and why you should think about adding one to your property.

What is an Accessory Dwelling Unit (ADU)?

An accessory dwelling unit, commonly known as an ADU, is a smaller housing unit situated on the same lot as a primary home. These units can include detached structures like tiny houses, converted garages, or even basement apartments.

ADUs are adaptable; they can house family members, serve as rental properties, or even function as a home office. According to a report from the American Planning Association, cities that have embraced ADUs have seen a 50% increase in housing styles and options available to families. This flexibility makes ADUs a popular choice for many homeowners.

The Housing Crisis and Increased Demand

Urban areas are undergoing a housing crisis, leading to higher property prices and limited affordable options. Many families are now considering ADUs as a practical solution. For example, areas like Austin, Texas, have experienced a 75% surge in ADU applications in recent years, as families seek affordable living arrangements close to work and school.

In Delaware, at least 50% of renters are cost-burdened, meaning they pay over 30% of their monthly income for housing. A minimum wage worker would have to work almost 90 hours a week to be able to afford a 2 bedroom at fair-market rent ($1,400). Though Delaware on average has lower rents than most of the nation, rents have increased year by year.

ADUs help meet the demand for housing in a market that is unaffordable for most.

Financial Benefits of ADUs

I added an ADU to my property and it has drastically changed my life. While I used to rent out a room in my main house for $700, by moving myself into the ADU and renting out the entire house, I now charge $2,000. Eventually, I will move out of the ADU and rent it out as well, so the gross rent this one property will earn me each month will total around $3,500.

This tactic is called House-Hacking in the real estate investors' world, and I can't recommend it enough. Homeowners can earn rental income that helps cover their housing expenses, and potentially allow them to live for free. In Delaware, renting out an ADU can yield monthly rents of $800 to $1,600, significantly offsetting the cost of home ownership.

Moreover, homes with ADUs often see an increase in property value. Properties with ADUs can sell for 25% more than similar homes without them. This makes the brief investment in an ADU worthwhile, as it opens doors for future resale profits.

Flexibility and Versatility

ADUs offer versatile living solutions that adapt to changing needs. For instance, you might use the space to accommodate elderly relatives, welcome guests, or create a home office. If you want to maximize your property's potential, you can rent it out to tenants. Many homeowners report that having an ADU has allowed them to increase their property utility without needing to relocate, saving both time and expenses.

The customization available with an ADU ensures that it can be done by almost anyone. If you don't have or can't afford to build a separate, detached ADU, you can add one on to your current house. This could mean adding an addition, or converting a large room or section of your house into a self-contained living space. An example of this would be a finished basement that has a kitchenette, bathroom, and exterior access door.

Supporting Sustainable Living

Choosing to build an ADU contributes to sustainable living. By maximizing the use of existing land, homeowners can limit new construction and help maintain green spaces.

ADUs also promote energy efficiency. Smaller spaces typically require less energy, and many owners opt for sustainable materials and energy-efficient appliances. A study found that homes using energy-efficient designs in their ADUs can save up to 30% on utility bills, making it an eco-friendly choice.

Navigating Zoning Regulations

While the benefits of ADUs are clear, understanding zoning regulations in your area is crucial. Many municipalities are easing restrictions on ADUs to address housing shortages. For instance, in July 2024, Delaware updated their ADU policies to become more lax in an effort to encourage affordable housing efforts.

However, regulations can differ greatly by location, even county. Before building, review local zoning laws and building codes to ensure you comply. This step helps avoid legal challenges and ensures the unit meets your intended purpose.

If you'd like to review Delaware's ADU laws, you can view them here:

New Castle County ADU laws

Kent County ADU laws

Sussex County ADU laws

Design Considerations for Your ADU

Designing an ADU requires careful thought about space and function. Homeowners should aim for designs that complement their main house while maximizing utility. Ensure that you follow your County's specific requirements when designed your ADU, such as its size and location.

My ADU's layout

Whether you choose a cozy studio or a two-bedroom unit, focus on essential features like a full kitchen, bathroom, and a comfortable living area. Additionally, consider outdoor spaces and private entrances to create distinct and functional living arrangements. My ADU is connected to a 3 car garage with interior access, as well as a separate exterior door.

Building Equity Through an ADU

An accessory dwelling unit does more than meet immediate needs; it also builds long-term equity. As property values appreciate, adding an ADU can lead to a notable increase in your home's overall value. According to a study by the National Association of Realtors, homeowners who have ADUs can enhance their property value by approximately 15%.

This growth in equity can be a valuable asset for future financial planning, such as retirement or investment opportunities.

ADUS in Delaware

While ADUs aren't a new concept, Delaware has been a bit slow to implement them. Each county has their own rules. For Sussex county, there were several restrictions on ADUs involving square footage, proximity to the main house, who was allowed to live in it, and so forth. Here are the requirements for an ADU in Delaware:

• Attached accessory dwelling units shall comply with the same setbacks as the principal structure.

• Detached accessory dwelling units shall be placed behind the principal structure and maintain 1/2 of the principal structure's side and rear setbacks.

• Septic inspection by DNREC

• ADU cannot be larger than 50% of the main home's square footage, or 1000 sq ft.

  
  

  Applications for accessory dwelling units shall also include:

  
  

• Property survey

• Full building plans for entire new structure or addition/renovation.

• $500 application fee

Considering the Future with an ADU

Adding an accessory dwelling unit to your property unlocks various benefits. With the ability to generate income, accommodate family, and promote sustainable living, ADUs are an appealing option for homeowners today.

As housing markets evolve continuously, investing in an ADU might align perfectly with your current needs and long-term financial goals. Whether you're seeking a productive investment or a way to expand your living space, an accessory dwelling unit could be the answer you’ve been looking for.