ADUs & Backyard Homes

What are accessory dwelling units?

An accessory dwelling unit (ADU) is a secondary, self-contained residence built on the same lot as a primary home. Also known as granny flats, in-law suites, or backyard cottages, ADUs have their own kitchen, bathroom, sleeping area, and entrance. Prefab ADUs are factory-built and delivered to your site, cutting installation time from the typical 6–12 months of a custom build to as little as 8–12 weeks.

Who they're best for

ADUs work well for homeowners who want to generate rental income, house aging parents or adult children, or add a home office or studio without moving. They're also popular in high-cost markets (California, Washington, Oregon, the Northeast) where ADU-friendly zoning has expanded rapidly in recent years. If your property already has a primary residence and adequate setback space, an ADU can add significant long-term value.

Typical price range

Prefab ADUs typically range from $60,000 to $300,000 for the unit itself, before site prep, foundation, and utility connections. A small studio ADU (300–400 sq ft) often runs $80,000–$130,000 fully installed, while a two-bedroom ADU (800–1,000 sq ft) can exceed $250,000 once site work and finishes are included. Permit fees vary widely by jurisdiction — budget $5,000–$25,000 extra.

Key considerations

• Zoning and permits: ADU regulations have loosened significantly since 2020 in states like California, Oregon, and Washington. Elsewhere, approval processes vary by city and county. Verify that your lot allows an ADU before shopping.
• Utility connections: Most ADUs need separate water, sewer, and electrical service runs from the primary home. Some jurisdictions allow shared utilities; others require independent meters. Costs run $10,000–$40,000.
• Rental income potential: In high-demand markets, ADUs can generate $1,500–$3,500 per month in rental income. Check local short-term rental rules if Airbnb or similar is part of your plan.
• Financing: ADU loans include HELOCs on the primary home, renovation loans, and specialized ADU financing products. Some states (including California) offer ADU-specific grants and low-interest loans.

How to choose

Start by confirming ADU approval on your lot, then filter ADU manufacturers by size and delivery region. For rental-focused buyers, prioritize models with full kitchens and separate entrances. For family-use buyers, think about accessibility (step-free entrances, wider doorways) if aging parents may live there. Compare available ADU models side by side on sq ft, bedroom count, and standard finishes.