Understanding the Differences: DADUs vs. ADUs in Real Estate

by | Feb 14, 2024 | Property Types and Niches

Accessory Dwelling Units (ADUs) and Detached Accessory Dwelling Units (DADUs) are transforming the real estate landscape. These smaller, self-contained living spaces built within or on the same property as an existing home offer flexibility, potential income, and solutions for evolving housing needs. This increasing popularity is particularly evident in urban areas where space is at a premium and housing demands are high.

What is an ADU?

Definition: An Accessory Dwelling Unit (ADU) is a secondary housing unit created within or attached to an existing single-family home. Characteristics: ADUs are typically smaller than the main house and include their own kitchen, bathroom, and living area. They often repurpose existing spaces like basements, garages, or attics. Zoning: Local zoning restrictions dictate ADU size limits, parking requirements, and whether they can be rented out. Example: A suburban homeowner converts their attached garage into a studio apartment ADU, perfect for generating rental income.

What is a DADU?

Definition: A Detached Accessory Dwelling Unit (DADU) is a standalone housing unit located on the same lot as a primary residence. It is entirely separate from the main house. Features: DADUs function as small, independent homes, with complete kitchens, bathrooms, and living areas. They offer greater privacy compared to ADUs. Zoning: While similar regulations apply, DADU zoning sometimes differs from ADUs in terms of allowable size, setbacks from property lines, and other considerations. Example: A Seattle homeowner constructs a brand-new DADU in their backyard, designed to house aging parents close by while maintaining independence.

Feature DADU ADU
Location Detached from the main house Attached or within the main house
Privacy Offers greater privacy and separation Less private due to proximity to the main house
Typical Construction Costs Generally higher due to building a standalone structure Potentially lower costs, especially when converting existing space
Rental Income Potential Often commands higher rents due to size and privacy May have lower rental income potential depending on size and location
Ideal Uses Rental units, multigenerational housing, detached home offices Rental units, housing for family members, potential home offices (if layout allows for privacy)
Zoning Considerations May have more flexible setback requirements, size limits May face stricter regulations on size, design, and proximity to the main house

Case Studies

Case Study 1: A Seattle homeowner who added a DADU for rental income The Situation: Sarah and Ben, homeowners in a popular Seattle neighborhood, saw their property taxes steadily rising. Knowing their backyard had room, they decided to build a DADU to generate income to offset their expenses. The Challenges: Navigating Seattle’s permitting process was time-consuming, and finding a contractor familiar with the city’s specific DADU regulations took some effort. The Outcome: They built a modern 700 sq ft DADU with high-end finishes. While costs were higher than expected, the unit commands premium rent in Seattle’s competitive market. It consistently generates enough income to cover their mortgage and property taxes, providing a significant financial cushion. Case Study 2: Conversion of an attic into an ADU for an aging family member The Situation: Maria’s elderly father needed more support but wanted to maintain his independence. After considering assisted living options, she decided converting her spacious attic into an ADU would be ideal. The Challenges: Ensuring the ADU met accessibility standards was paramount. Adding a small elevator involved extra costs but was a worthwhile investment. Local zoning required Maria to remain on-site, but this fit her lifestyle. The Outcome: The cozy ADU offers her father privacy and autonomy, with the comfort of having Maria close by. The family avoids expensive assisted living costs, while Maria gains peace of mind knowing she can easily provide assistance.

Navigating Legal and Zoning Regulations

Think of building a DADU or ADU as a journey where early preparation is key. Zoning regulations and legal requirements are designed to ensure these projects fit within the community’s overall planning goals. Cities and counties vary significantly in their approach to ADUs/DADUs. Some enthusiastically encourage them as a means of creating more housing options, while others maintain numerous restrictions to protect the existing character of neighborhoods. Understanding the specific rules in your desired location is the essential first step. Don’t assume what’s allowed in one city applies to your area! Your local planning department is the ultimate authority on what you can and cannot build. This is where proactive research pays off. Before investing heavily in design plans, contact the planning department to understand restrictions like lot size minimums, height limitations, allowable square footage, and any potential parking requirements. Some cities even have pre-approved DADU designs to streamline the process! Partnering with experienced architects and builders remains invaluable. They are well-versed in the nuances of the permitting process and can translate the “legalese” of zoning codes into practical advice for your project. Their understanding of local regulations can even help you explore creative design solutions that maximize your project’s potential while staying fully compliant.

Which are better: DADUs or ADUs?

By now, you understand that both DADUs and ADUs offer unique advantages depending on your goals and circumstances. DADUs, as standalone units, often command higher rents and provide greater privacy, making them a strong choice for purely income-generating properties. ADUs, with their potential connection to and integration with the existing home, can be a powerful solution for accommodating family members in need of extra support or creating home workspaces where a degree of connection is desired. Ultimately, there’s no single “best” choice between an ADU or a DADU. Successful projects start with careful research – understand your budget, your property’s potential, and your local zoning regulations. Exploring the case studies presented earlier underscores the importance of tailoring your approach to your individual goals. Whether you envision rental income, aging-in-place solutions, or a dedicated workspace to boost professional goals, the flexibility of these smaller living units can open up new and exciting opportunities. If you’re ready to take the first step in determining if an ADU or a DADU is right for you, gather detailed information from your local planning department. A consultation with architects and builders specializing in these types of projects can also prove invaluable. With this knowledge, you can confidently embark on the path to enhancing your property and unlocking the hidden potential of DADUs/ADUs. Get started on your next investment project with a hard money loan from Intrust Funding! Visit our DADU scenario page to learn more!

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