An Accessory Dwelling Unit (ADU) is an additional living space on the same property as a single-family home. ADUs include detached units, such as studio apartments and granny flats, as well as attached units, such as converted garages or carriage houses. 

ADUs provide affordable housing options that are more flexible than traditional apartment complexes or condos. So if you are considering building an ADU in your Wake County property, you are probably aware of the financial perks of doing so, including increased curb appeal, tax incentives from the federal government, and additional income from renting out the space on services like Airbnb. But what you may not know is how easy it is to get started with this construction project. 

The following guide walks you through everything you need to know about accessory dwelling units, including what they are, why there are 1.4 million American properties with ADUs, and how you can get one built on your property!

What is an ADU?

An ADU is a second small dwelling on the same grounds as your single-family residence. They are often used as rental units, in-law units, guesthouses, or home offices. ADUs can be either attached or detached from the main house and are subject to different regulations depending on their location.

An ADU must be an independent living space, suitable for year-round habitation. This means the unit must have its own kitchen, bathroom, and sleeping area. The unit should also be accessible from the main house without going through another dwelling unit. Additionally, the ADU must have its own heating and cooling system and be up to code regarding fire safety and energy efficiency.

What’s involved in building an ADU?

Creating an ADU usually involves many of the same steps as building a house from scratch. 

The most important thing when building an ADU is to ensure that your conversion is legal. There are often strict regulations surrounding these types of units, so it is important to check with your municipality to see what the regulations are. 

Once you know that you can proceed with building, the next step is to decide what type of ADU you want. There are three main types of ADUs: attached, detached, or converted units. Each type has its own benefits and drawbacks that you will need to consider before making a decision. 

The next step is to find a general contractor in Wake County, NC, who specializes in building ADUs. Once you have found a contractor, they will help you with the rest of the process, including getting the necessary permits and inspections. Doing it alone? Remember that the permitting process can be time-consuming, so be patient and make sure to dot all your i’s and cross all your t’s. 

With the permits in hand, you can finally start construction on your ADU.

Keep in mind that if you live in a homeowners association (HOA), you may have another level of complexity because HOAs often have stricter construction guidelines.  

How much does it cost to build an ADU?

The cost of building an ADU can vary greatly depending on whether you are converting an existing space, creating an attached addition, or building a whole new structure. If you are starting from scratch, the cost can be upwards of $100,000. If you are adding on to an existing home, the cost ranges between $40,000 and $125,000. And if you are converting an existing space, like a garage, the cost is about $15,000 to $30,000.

Adding a bathroom will set you back another $30,000. (Related blog: Different Types of Toilets)

Other factors that will affect the cost of your ADU include the materials you use, the location of the unit, and whether or not you hire a professional contractor.

How can you finance your ADU?

If you are considering adding an ADU to your property, you may be able to finance the project by tapping into your home equity. This can be done through a cash-out refinance, home equity loan, or home equity line of credit (HELOC). 

  • A cash-out refinance entails taking out a new mortgage larger than your current one and using the extra funds to pay for your ADU. 
  • With a home equity loan, you borrow a lump sum of money and make fixed monthly payments. 
  • A HELOC is similar to a home equity loan, but instead of receiving a lump sum of money, you are given a line of credit that you can draw from as needed.

Another option is a short-term construction loan. Construction loans are typically interest-only loans, which means you only have to pay the interest on the loan during the construction phase. Once construction is complete, you can either refinance the loan into a traditional mortgage or sell the property to pay off the loan.

You may also be able to get a personal loan to build your ADU. This can be a great option if you have good credit and can qualify for a low-interest rate.

Whichever route you choose, make sure you do your research and compare rates before moving forward.

How much home value does an ADU add?

In the short term, ADUs provide value in the form of rental income. This can help offset your mortgage payments, property taxes, and other carrying costs associated with owning a home. 

In the long term, ADUs can add significant value to your home by increasing its square footage and overall livability. 

ADUs can also be used as a source of retirement income or sold separately from the primary residence for a profit.

Conclusion

If you want to maximize your investment in real estate, one way to do so would be to create an Accessory Dwelling Unit. ADUs are living spaces that are not primary residences but rather additions to existing homes used as rental properties or secondary homes. If you are considering building an ADU in Wake County, NC, get in touch with Glasgow Design Build today! 

Glasgow Design Build is a Raleigh-licensed general contracting firm specializing in creating new spaces and renovating existing ones. Whether you need help building an ADU, building a porch/deck, or with other types of home renovations in Raleigh, NC, we have you covered! Feel free to call  (919) 244-2979 or fill out an online form to schedule an appointment.