Considering whether to add an ADU vs Tiny House addition to your property? Either might work. Consider the size of your yard, any extra interior space, your preference for parking on the street instead of your garage, and local and state zoning laws. Be clear on current and future uses. Look into resale values in your area.
Tiny houses on a foundation often count as ADUs – in some areas those on wheels do, too. On average, ADUs are bigger and might be built inside a home or repurposed garage. Confused? Read on.
Definition of ADU and Tiny House
An ADU, or Accessory Dwelling Unit, sits inside the property line of an existing home. Cottage style ADUs rest on a backyard foundation. Alternatively, you can build out an ADU inside an existing basement, attic, master suite, or garage. Sizes range from 150-1200 square feet.
Tiny houses are, on average, smaller than ADUs. They’re always stand-alone homes. Some sit on a foundation. Others, built on a trailer base with wheels, can be towed to different locations.
Both ADUs and tiny houses include a kitchen, bathroom, sleeping area, and separate entrance.
Growing Popularity of Alternative Housing Options
Zillow predicts that higher mortgage rates will ease home prices in 2024. Nonetheless, prices and monthly payments continue to be out of reach for many, especially first-time homebuyers. ADUs and tiny homes address the gap in the market for smaller houses.
Likewise, while rents began cooling in 2023, they remain well above pre-COVID levels. The cost increases in rent and mortgage payments have outpaced income growth.
Creative ways to add housing options include ADUs and tiny houses. Either can be built for a fraction of the cost of a new home on a new lot. Homeowners who add an ADU or tiny house to their properties look to earn current rental income, future home price gains, or both.
Definition & Purpose of Accessory Dwelling Units
The acronym ADU stands for Accessory Dwelling Unit. Accessory means it serves a secondary, and dependent, relationship to the main dwelling unit or house. (Think of earrings, which serve a secondary, and dependent, relationship to an outfit of pants and a blouse.) People build ADUs for dwelling in, not for a business or storage purpose. Each ADU forms a single unit of housing.
The primary house shares its yard with a detached ADU – either cottage-style or repurposed garage. ADUs built by renovating parts of a home or attached garage share walls with the main house.
The size of an ADU differs by location. State-wide ADU laws in California, for example, specify that detached ADUs must have a liveable area of at least 150 square feet. Maximum size depends on the size of the house, up to 1200 square feet.
Businesses prefabricate some ADUs. Owners or construction teams build others from the ground up.
Benefits of ADUs
Living in an ADU suits those who want or need to live near the family:
- Grown kids moving back with their parents
- Seniors looking for independent housing close to family
- A nanny, Au Pair, or other family caregiver
- Anyone looking for a small, affordable rental in a residential neighborhood
- Some locales permit temporary rentals such as through AirBnB or VRBO
As the homeowner, you’ll appreciate that a 2021 Porch.com study showed that a home with an ADU is priced 35% higher, on average, than a home without one. Some cities report lower prices for homes with ADUs, though, so it pays to talk to a local realtor or do some online research in your market. Keep the resale premium, if any, in mind when putting together a budget for your addition.
The cost of a stand-alone ADU runs around three times or more that of a conversion. Rodney Harrell of the AARP told Nerdwallet that these costs range from $50,000 for a conversion to over $150K for a standalone unit.
ADUs provide a way for you to earn offsetting rental income to defray the cost of a mortgage, property taxes and insurance.
Keep in mind that foundation-built ADUs can be rented out. They cannot be sold separately from the main home.
Definition and Concept of Tiny Houses
Tiny Houses, popularized by shows like Tiny House Nation, sit on a foundation or wheels and often include a loft area as a bedroom. They never share walls with another house. Devotees of tiny houses value their appealing, space-saving design features such as under-stair storage, skylights, or windows that open outward.
Smaller on average than an ADU, tiny houses seek to support a lifestyle with fewer possessions and intentional living. They include 100-400 square feet of floor space. Some feature small porches and deck or rooftop spaces. Most tiny houses share their construction style with a built house. They may be constructed elsewhere, then transported to the purchaser.
If you build or buy a tiny house on wheels, towing it to new locations becomes possible. Many states treat these as RVs for zoning purposes, however, which can introduce consecutive stay and total days per year limits. Alternatively, some cities specifically allow tiny houses on wheels in their ADU ordinances.
If you build a stationary tiny house on a foundation on your property, it will function as an ADU, and can be used similarly. You can house grown kids, caregivers, or rent it out. Keep in mind that some tiny houses, with steep stairs or even ladders to a loft space, present challenges for less physically capable individuals. A tiny house, therefore, may or may not suit senior parents who have mobility concerns.
The cost to build or buy a tiny house ranges from $30,000-$160,000.
Benefits of Tiny Houses vs ADUs
Tiny houses appeal to many for their miniature design and the invitation to minimalism that smaller spaces provide. With less interior space, they encourage more outdoor living.
Choosing a tiny house to serve as an ADU builds on this charm. You’ll attract tenants looking for less day-to-day space to have to clean, organize, and furnish. Grown kids just starting out in a new job, renters who travel quite a bit, or a newly married couple may all fit this profile.
If your city allows using the tiny house as a temporary rental, you’ll attract those eager to try out the lifestyle.
A Tiny House May Also Be an ADU
A tiny house built on a foundation and located within the property of another house usually fits the definition of an ADU.
Los Angeles was the first in California to allow a Moveable Tiny House, 150-430 square feet, towable on California highways, to function as an ADU. It can be sold separately from the house to a new owner who transports it to a new space. Other cities, in California and elsewhere, have followed suit.
ADU and Tiny House Building Codes and Zoning Laws
Different states and local zoning laws differ in their definitions and requirements for ADUs. Check your local and state laws. AARP states, “Among the places with statewide or local laws that encourage the creation of ADUs: Arizona, California, Connecticut, Georgia, Maryland, New Hampshire, Oregon, Rhode Island, Vermont and Washington, D.C.”
Top states for tiny living include California, Oregon, Florida, and Colorado.
Things to dig into and understand:
- Minimum and maximum square footage restrictions
- Handling utility connections
- Any renewable energy requirements
- Parking requirements, especially if you convert your garage
- Which appliances must be included for a kitchen
- Lot minimums, if any
- Are tiny homes on wheels allowable as ADUs, and if so can they be sold separately from the primary residence?
- Necessary permits and approvals
Either an ADU or Tiny House can earn you income. You’ll also improve housing availability – for your family or in your wider community.
