Considering adding a backyard house? These self-contained living spaces are officially known as accessory dwelling units (ADUs). Backyard homes are becoming a top choice for homeowners looking to maximize their property’s potential. Whether you’re seeking rental income, housing for family members, or a flexible workspace, a backyard guest house can be a smart investment.
Backyard ADUs come in various styles, from detached guest houses to garage conversions. These small but functional homes provide independent living spaces with kitchens, bathrooms, and private entrances, making them an appealing and practical housing solution. Let’s explore why building an ADU in your backyard can be a game changer for homeowners in California and beyond.
What is a Backyard ADU?
A backyard ADU is a secondary dwelling unit built on the same lot as a primary residence. These compact homes are ideal for renters, family members, or personal use. Backyard ADUs are gaining popularity in cities like San Diego, where housing shortages and high real estate prices have prompted homeowners to explore innovative ways to maximize their property’s potential.
Building an ADU in Your Backyard
When building an ADU in your backyard, you’re essentially creating a self-contained living space that can be used for a variety of purposes—whether it’s additional income through renting, housing family members, or providing a private office or guest space. These backyard homes are designed to complement the primary residence, and in many cases, must adhere to specific design standards and zoning laws, especially if they are in historic districts, coastal zones, or other regulated areas.
Types of Backyard ADUs
There are several types of backyard ADUs you can build, depending on your property’s layout and your needs:
- Detached ADU: This is a stand-alone unit located in the backyard, separate from the main house. It provides the most privacy and is ideal for renters or extended family.
- Attached ADU: This ADU is physically connected to the primary residence, often sharing one wall but maintaining its own entrance and facilities.
- Garage Conversion ADU: In many cases, homeowners choose to convert their existing garage into a livable backyard home. This type of ADU utilizes the existing structure, making it more cost-effective.
Read more about detached vs attached ADUs. Read more about garage conversion vs demolition.
Key Considerations for a Backyard House Design
When designing an ADU in your back yard, it’s important to take into account the size of your lot, existing structures, and local zoning laws. In some cases, there are restrictions on how large a backyard ADU can be, where it can be placed, and how it must look in relation to the primary home. In California, for example, ADUs must generally meet certain criteria for square footage, setbacks from property lines, and access to utilities.
- Lot Size: Ensure your backyard has enough space to accommodate the ADU while still leaving room for yard space, parking, or any other needs. Read more about picking the right ADU size.
- Design Harmony: ADUs should complement the style of the main residence and neighborhood. Some HOAs and cities may require it. Read more about exterior options.
- Utilities and Access: Plan for how the ADU will connect to existing utility lines (electricity, water, sewer, gas) and make sure there is an appropriate entry point for the new unit.
Read more about ADU Feasibility Studies as a first step in the planning process for your back yard guest house.
Backyard ADUs: Prefab vs. Stick-Built Construction
When planning a backyard guest house or backyard home, one of the biggest decisions is how to build it. Homeowners often weigh prefab ADUs (such as modular or panelized construction) against traditional stick-built backyard homes. Each method has pros and cons depending on budget, timeline, customization needs, and site conditions.
What is a Prefab Backyard Home?
Prefab ADU homes are factory-built and delivered to your property as either a complete structure (modular) or in large pre-made sections (panelized). These units are designed for quicker assembly on-site but may come with design limitations and higher site preparation costs due to crane placement and delivery access.
What is a Stick-Built Backyard ADU?
A stick-built ADU is constructed entirely on-site using traditional building methods. While this process typically takes a bit longer, it allows for more customization and better adaptation to complex sites. Sometimes stick built is the only option due to site constraints or HOA/jurisdiction requirements.
Which One is Best for a Backyard ADU?
- Choose Prefab ADUs if you want a faster build on-site and are okay with limited design flexibility.
- Choose Stick-Built ADUs if you want more customization, better integration with your main home, and fewer site access concerns.
For a full comparison of options, check out: Prefab vs. Stick-Built Backyard Homes – What’s Best for Your Property?
Benefits of adding a Backyard ADU
Building an ADU in your backyard comes with numerous benefits. For homeowners in regions with high housing demand, such as San Diego, backyard ADUs can offer an affordable way to increase housing stock and create a source of income. Additionally, these units can provide housing for aging parents or adult children, allowing families to stay close without sacrificing independence. Read on for 8 benefits of adding a backyard home in San Diego:
1. Additional Income for your Family.
These dwelling units are a great source of rental income and you get to do so from the comfort of your home. A two-bedroom ADU can bring in upwards of $4,000 of income per month in San Diego, and there is potential for lower maintenance costs as the rental property is easy to watch over and care for. The cash on cash return is typically 15%+ in San Diego markets, or much more if the ADU is financed. The return on investment of an ADU is impressive and compelling for those with a larger property who may be interested in sharing their space with a new neighbor.
2. Increased Property Value.
A newly-built granny flat adds instant appeal and resale value to your home when you decide to sell, as it will increase the value of your property and (depending on the use of your ADU) may even be written off of your taxes. Rental income is attractive to buyers who may not otherwise be able to afford a property, or who have an extended family living with them, however all cases can enjoy the additional value accessory dwelling units add onto a home. Homes with ADUs appraise higher than those that do not, due to the cost of improvements and many other features. Read more about how backyard ADUs can increase the overall resale property value of homes.
3. Affordable Housing for Family Members or Caregivers.
Home prices and rent rates have soared in recent months, encouraging many young adults to remain at home with their parents rather than venturing off on their own. An backyard ADU affords both the parents and the child more privacy, while allowing both parties to stay close and save money. Conversely, an aging parent may choose to move into an accessory dwelling unit on the property of their adult children to be close to their family, while still maintain their day-to-day independence. In fact, intergenerational living is one of the biggest reasons homeowners choose to invest in an ADU on their property, as if gives all members peace of mind and more time together. Live-in nannies and tutors are also great tenants for ADUs. Read more about considering ADUs as an alternative to nursing homes.
4. Room for a Home Office in Your Back Yard.
As many of us know by now, mixing “home life” with “business life” can be tough. If you work from home, an ADU could be a great place for one or several family members to set up an office environment to focus and avoid distractions. Setting up an at-home office experience provides a professional, quiet space for those that miss an in-office feel. A setting like this may also be valuable to a small business owner looking for a flexible space to work out of, while still maintaining the ability to change the space down the line. Additionally, you may be able to write off the office space on your taxes as a business expense.
5. Downsize Within Your Same Property.
If you’ve always wanted to travel but don’t want to sell your family home, consider renting it out. Building a backyard ADU to live in on your trips home, freeing up some money and retaining the option to move back into the larger home later will not only decrease your own cost of living, but will also provide you with a massive source of extra income for years to come. This money can even be used for more travel expenses… and the cycle continues! Downsizing is also a great option for an aging couple looking to move to a smaller, lower-maintenance space without compromising their beloved home. Being an on-site landlord will allow you to supervise your tenants while they enjoy your old home without needing to stay on top of its regular upkeep. Read our top tips on downsizing into an ADU.
6. Space for Hosting Guests.
Giving guests access to their own private unit could make everyone feel more comfortable and make your home feel less crowded. Particularly with extended stays, a separate ADU for guests can change the entire vibe of visits. Putting guests in their own private residence will give them more comfort and space, while providing them the benefit of not needing to pay for a hotel or short-term rental. This will also allow the homeowner to go on with their day-to-day life without being too disrupted by at-home guests.
7. Tax Benefits.
Homeowners can accumulate tax depreciation deductions on ADUs, even accelerating the depreciation to take advantage of tax benefits sooner. This is especially beneficial in the case of rentals or small business offices, as you will likely be able to deduce the costs of construction and maintenance. Talk to your accountant to see what tax benefits you may be eligible for in your situation.
8. Sustainable Development.
Accessory dwelling units use fewer resources and less land than single-family housing options, making ADUs a sustainable choice for environmentally-conscious families. Compact units also require less energy to heat and cool, which keeps utility costs down and reduces emissions. The overall benefits of an ADU make these units a great option for all lifestyles.
Strategic Reasons for Building a Backyard Home
Adapting to Changing Family Dynamics
As family structures evolve, so do housing needs. Whether it’s young adults who aren’t ready to move out, aging parents who need more care, or extended family members looking for flexible living arrangements, ADUs offer a practical solution. They allow for multigenerational living without sacrificing privacy or independence. As the trend toward living with extended family grows, having an ADU on your property can provide the perfect balance between closeness and autonomy, while also future-proofing your home to adapt to changing family dynamics.
Capitalizing on Rental Market Opportunities
The rental market, especially in desirable areas like San Diego, continues to thrive, making ADUs an appealing investment for homeowners looking to capitalize on rental income. With minimal overhead costs once the ADU is built, it becomes a long-term source of passive income. Whether you choose to rent it out full-time, use it for short-term rentals, or provide housing for students or professionals, an ADU allows you to tap into a high-demand market while also increasing the value of your property. As housing demand grows, ADUs remain a prime opportunity for those looking to invest in real estate.
Responding to Housing Shortages
The ongoing housing shortage, particularly in regions like San Diego, has put pressure on cities and communities to find creative solutions. ADUs, or backyard homes, are a strategic response to this issue, providing additional living space without the need for large-scale developments. By utilizing existing properties, homeowners can contribute to increasing the housing supply in a sustainable way, helping alleviate the housing crisis. Whether you choose to rent the unit or house family members, your ADU can play a vital role in responding to local housing needs.
ADUs: Future Proof Housing
ADUs represent a versatile and strategic investment in your property’s future. Backyard houses emerge as a beacon of “future proof housing.” These units not only cater to the growing desire for multi-generational living but also embody the essence of “aging in place,” offering a dignified, independent living arrangement for seniors within the comfort of their community. As we navigate the complexities of modern living and rising housing costs, investing in an ADU stands out as a smart, adaptable, and environmentally conscious choice that aligns with the diverse needs of homeowners and communities alike.
Explore Backyard ADU Floor Plans
If you’re considering a backyard home, try checking out off the shelf floor plans to find something close to what you are envisioning. You can mark up plans to share with your ADU designer. This approach helps expedite your design process and reduce costs.
1 Bedroom Floor Plans
2 Bedroom Floor Plans
3 Bedroom Floor Plans
4 Bedroom Floor Plans
Two Story Floor Plans
Redfin asked ADU experts to share their best tips and tricks that will help you successfully build an ADU. Check out SnapADU’s tip on 14 Expert Tips to Consider Before You Build an ADU.
By investing in a backyard house, you can increase your home’s value, generate rental income, and create a flexible living space for years to come. Connect with SnapADU to start designing your backyard home today!
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