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Accessory Dwelling Units—What Are They?

What is an Accessory Dwelling Unit?

An accessory dwelling unit, or ADU, is an old, but simple idea—having a second small dwelling on the same grounds (or attached to) your regular single-family house. ADUs go by several names, including granny flats, in-law suites, accessory houses, or carriage houses.

What qualifies as an Accessory Dwelling Unit?

To qualify as an ADU, the unit must have a fully functional kitchen, full bathroom and living space. It may be attached to a house or garage, or it can also be built as a stand-alone unit. Typically, you won’t be able to access the primary home from inside the ADU.  Also, unlike multifamily properties, which have their own separate utilities and addresses, an ADU will usually share the same utilities and address with the primary residence.

What are the benefits?

ADUs can be used in so many different ways and have great potential benefits and positive impacts for owners. Here are a few:

Increased Property Value. A separate living structure can easily raise property value and, if selling, bring more potential buyers to the table.

Housing for Elderly Family Members. The comfort of offering family members their own private space while still being close by and available is reassuring for everyone.

Hosting Family and Guests. Separate accommodations outside the main house give privacy and relaxation to all parties.

Rental Income. An ADU on your property can provide supplemental short- and long-term income.

Home Office Space. Remote work has become more common and having a space free of distractions can be beneficial.

Can I finance an Accessory Dwelling Unit?

If you are looking for ways to finance the building of an ADU on your property, you may be research construction loan options. However, some lenders may not do these type of loans for ADUs and if they do, they may not be the best option for homeowners. More popular financing options include a cash-out refinance, home equity loan, home equity line of credit or a personal loan. Discuss what financing option is best for you with your local credit union.

Whether it’s housing for loved ones or additional income, building an Accessory Dwelling Unit is worth looking into and can bring limitless value to your life.

To learn more about ADUs and home financing options, register for our upcoming free webinar presented by our Mid Oregon Home Loan team on March 17, 10:00 a.m.

Want to know more? Read additional Mid Oregon blog articles about home loans and lines of credit.

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